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Call Updates

Beazer Homes - BZH - close: 65.49 change: +1.06 stop: 62.29

Stronger than expected housing starts data helped lift the homebuilders. The DJUSHB index added 1.55%. Shares of BZH closed with a 1.6% gain but the stock remains under short-term technical resistance at the simple 10-dma (65.60). It certainly looks like the homebuilders, and BZH, are setting up for a bigger rebound but more conservative traders may want to wait for a move over the 10-dma before initiating positions. Our target is the $69.85-70.00 range.

Picked on February 15 at $ 65.05
Change since picked: + 0.44
Earnings Date 01/19/06 (confirmed)
Average Daily Volume = 1.2 million

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Chico's FAS - CHS - close: 48.66 change: -0.12 stop: 44.49

Retail stocks got another boost today driven by leadership in J.C.Penney (JCP). Shares of JCP shot to new relative highs after a better than expected earnings report this morning. Shares of CHS, which were already out performing this week, experienced a little bit of profit taking. Our target is the $52.00-52.50 range.

Picked on February 14 at $ 47.61
Change since picked: + 1.05
Earnings Date 03/01/06 (confirmed)
Average Daily Volume = 1.8 million

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Cigna - CI - close: 121.57 change: -0.95 stop: 118.79 *new*

Healthcare stocks under performed the broader market today. Shares of CI gapped lower this morning only to bounce from the $120.00 level. The bigger picture is still positive for CI but short-term we're getting mixed signals and traders may want to be cautious. We are going to raise our stop loss to $118.79, which is just under Monday's low. More conservative traders may want to put their stop loss closer to the $120 level. We would wait for a move over $123.00 or over $124.00 before buying new calls. Our target is the $129.50-130.00 range.

Picked on February 12 at $123.63
Change since picked: - 2.06
Earnings Date 02/08/06 (confirmed)
Average Daily Volume = 979 thousand

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Express Scripts - ESRX - close: 93.51 chg: +0.67 stop: 89.95 *new*

Finally! ESRX has finally broken out above resistance at the $93.00 level. This looks like a new bullish entry point. The only problem is our time frame. At the moment we're expecting ESRX to report earnings on February 22nd and we do not want to hold over the report. That means we need to exit on Tuesday or maybe Wednesday of next week if ESRX reports after the closing bell. Our target is the $99.50-100.00 range. We are raising the stop loss to $89.95.

Picked on January 29 at $ 92.42
Change since picked: + 1.09
Earnings Date 02/22/06 (unconfirmed)
Average Daily Volume = 2.1 million

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Hartford Fin. Srv. - HIG - cls: 83.38 chg: +0.38 stop: 79.49

Insurance stocks as a group lagged behind the rally in the broader markets today. Shares of HIG were no different but the stock did inch higher following yesterday's move past technical resistance at the 21 & 100-dma's. More conservative traders may want to exit near resistance at $85.00. We're going to target the $87.50-90.00 range.

Picked on February 14 at $ 82.12
Change since picked: + 1.26
Earnings Date 01/26/06 (confirmed)
Average Daily Volume = 1.1 million

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Universal Health - UHS - close: 51.16 chg: +0.22 stop: 48.90

We don't see any change from our previous update on UHS. The stock continues to look bullish following yesterday's breakout. We have less than two weeks before UHS is expected to report earnings. We don't want to hold over the report. Our target is the $54.50-55.00 range.

Picked on February 15 at $ 50.51
Change since picked: + 0.65
Earnings Date 02/27/06 (confirmed)
Average Daily Volume = 613 thousand
 

Put Updates

Cameco Corp. - CCJ - close: 71.91 change: +1.65 stop: 72.56

Our position in CCJ is getting worse. We warned readers yesterday that we were getting uncomfortable with CCJ's relative strength. Mining stocks in general were pretty bullish today. Longer-term indicators and the P&F chart are still bearish but the short-term indicators are naturally turning bullish with this two-day bounce. Odds are growing that we will be stopped out tomorrow. Conservative traders may just want to exit as early as they can to minimize their losses!

Picked on February 07 at $ 68.57
Change since picked: + 3.34
Earnings Date 01/31/06 (confirmed)
Average Daily Volume = 1.1 million

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MGIG Invest. - MTG - close: 63.80 change: -0.49 stop: 66.05

MTG under performed the broader markets today but its intraday bounce from the lows of the session is a concern. The stock is definitely throwing off some mixed signals on both its daily and weekly charts. Currently MTG is trading near resistance at the 200-dma and the neckline of its bearish head-and-shoulders pattern. We would not suggest new put positions at this time. Our target is the $58.00-57.50 range.

Picked on February 06 at $ 63.70
Change since picked: + 0.10
Earnings Date 01/12/06 (confirmed)
Average Daily Volume = 833 thousand
 

Strangle Updates

(What is a strangle? It's when a trader buys an out-of-the-money (OTM) call and an OTM put on the same stock. The strategy is neutral. You do not care what direction the stock moves as long as the move is big enough to make your investment profitable.)

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Building Materials - BMHC - cls: 74.00 chg: +3.57 stop: n/a

BMHC is bouncing back toward resistance at the $75.00 level and the bottom of its gap down. We are not suggesting new strangle positions at this time. The options in our strangle play are the March $90 calls (BGU-CR) and the March $70 puts (BGU-ON). Our estimated cost is $8.20. Our target is $12.50 by March expiration.

Picked on December 18 at $ 80.95
Change since picked: - 6.95
Earnings Date 02/07/06 (confirmed)
Average Daily Volume = 527 thousand

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Encana Corp. - ECA - close: 42.84 chg: +1.87 stop: n/a

We are not suggesting new strangle positions. Our strangle strategy involves the April $50 calls (ECA-DJ) and the April $40 puts (ECA-PH). Our estimated cost is $3.45. We are aiming for a rise to $5.95.

Picked on January 10 at $ 45.56
Change since picked: - 2.72
Earnings Date 02/15/06 (confirmed)
Average Daily Volume = 4.4 million

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Loews Corp. - LTR - close: 96.00 change: +0.95 stop: n/a

There seems to be some confusion revolving around LTR's earnings results that came out this morning. The numbers don't match up (anywhere close) to Wall Street's estimates. Reporters interpreted the results as negative yet the stock price rallied strongly from its lows. Remember, this is a speculative play using the March options and we are no longer suggesting new positions. Buying this strangle was a bet that LTR will be trading at more than $102 (above resistance) or less than $88 (under support) by March expiration. The options in our strangle are the March $100 calls (LTR-CT) and the March $90 puts (LTR-OR). Our estimated cost is $1.75.

Picked on February 13 at $ 95.72
Change since picked: + 0.28
Earnings Date 02/16/06 (confirmed)
Average Daily Volume = 513 thousand

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Ryland Group - RYL - close: 69.23 change: +0.97 stop: n/a

Better than expected housing start numbers fueled a bounce in the homebuilders. RYL is nearing resistance at the $70.00 level. We're not suggesting new strangle positions. Our play involves the April $80 calls (RYL-DP) and the April $70 puts (RYL-PN). Our estimated cost is $7.00. Our target is $12.00.

Picked on January 22 at $ 75.19
Change since picked: - 5.96
Earnings Date 01/24/06 (confirmed)
Average Daily Volume = 1.1 million
 

Dropped Calls

None
 

Dropped Puts

Intl Bus. Mach. - IBM - close: 80.91 change: +0.06 stop: 82.05

We are honestly surprised that we were not stopped out in IBM today. The stock remains under its trendline of resistance but we are choosing to exit early. The intraday action and bounce from the $80 level today looks like a set up for a larger rebound higher. Traders might actually want to consider bullish positions if shares trade over $82.00 or its 50-dma (currently 82.71).

Picked on February 06 at $ 79.49
Change since picked: + 1.42
Earnings Date 01/17/06 (confirmed)
Average Daily Volume = 6.0 million

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Meritage Homes - MTH - close: 59.26 chg: +1.09 stop: 61.11

We are going to call it quits with the MTH put play. The homebuilders are bouncing today after better than expected housing starts that hit highs not seen since the early 70's. If this bounce begins to fail again in a few days we may reconsider new bearish positions but we'll review all of the major homebuilders as candidates.

Picked on February 02 at $ 58.76
Change since picked: + 0.50
Earnings Date 01/26/06 (confirmed)
Average Daily Volume = 560 thousand
 

Dropped Strangles

None
 

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