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Call Updates

Cigna - CI - close: 127.51 change: +1.91 stop: 121.90

CI finished the week off strong. The vaulted out of the gate on Friday morning and hit a high of $129.08. Shares did pare their gains but still closed with a 1.5% gain on above average volume, which is usually a good sign. The MACD indicator has reversed back into positive territory again. Our target is the $129.75-130.00 range so we're not suggesting new bullish positions at this time. The P&F chart points to a $166 target.

Suggested Options:
CI is relatively close to our target so we're not suggesting new positions here.

Picked on February 26 at $124.57
Change since picked: + 2.94
Earnings Date 02/08/06 (confirmed)
Average Daily Volume = 944 thousand

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Garmin Ltd. - GRMN - cls: 74.77 change: -0.63 stop: 69.75

We were a little bit surprised by GRMN's under performance on Friday. The market turned higher yet GRMN failed to participate and erased Thursday's gain. The technical indicators might suggest momentum is stalling but we're not ready to give up yet. Volume on Friday's pull back in GRMN was very low and that suggests a lack of real selling pressure and more of a buyer pause. The current trend is still bullish but we'd probably not suggest new bullish positions here. Wait for a bounce from its simple 10-dma as a potential entry point. Our target is the $77.00-78.00 range. The Point & Figure chart points to an $85 target.

Suggested Options:
We are not suggesting new bullish positions in GRMN at this time.

Picked on March 02 at $ 72.70
Change since picked: + 2.07
Earnings Date 02/22/06 (confirmed)
Average Daily Volume = 1.2 million

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Hartford Fin. Srv. - HIG - cls: 81.55 chg: +0.36 stop: 79.95

Unfortunately, we have nothing new to report on for HIG. The stock is still slowly drifting toward support near $80.00 and its rising 200-dma, which should also act as technical support. Of course this slow decline is bad news for traders with March options, which expire in a week. We are not suggesting new bullish positions at this time. However, we will be watching for a bounce from $80.00 or a new move over $83.00 as potential entry point. Keep an eye on the simple 50-dma, currently at 84.15, as possible resistance. Our target is the $87.50-90.00 range.

Suggested Options:
We are not suggesting new bullish positions in HIG at this time.

Picked on February 14 at $ 82.12
Change since picked: - 0.57
Earnings Date 01/26/06 (confirmed)
Average Daily Volume = 1.1 million

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Altria Group - MO - close: 73.86 chg: +1.03 stop: 71.85

On your mark. Get set... Shares of MO continued to rally on Friday and the stock looks poised to breakout over resistance at the $74.00 level. MO's strength on Friday did push the stock above technical resistance at its 50-dma (73.60) and even its 100-dma (73.78). We are suggesting a trigger to buy calls at $74.11. If triggered we'll target a rally into the $77.50-78.00 range. More aggressive traders may want to aim higher.

Suggested Options:
We are suggesting April calls but we do not want to hold over MO's April earnings report.

BUY CALL APR 70 MO-DN open interest= 8262 current ask $5.00
BUY CALL APR 75 MO-DO open interest=76562 current ask $1.95

Picked on February xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 04/19/06 (unconfirmed)
Average Daily Volume = 8.1 million

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Ultra Petrol. - UPL - close: 52.81 change: +0.26 stop: 51.95

We will admit that last week the oil markets did not react to the ongoing Iran issue the way they thought they would. However, there is still a good chance for a rebound in the sector and the Iran story is far from over. The OIX oil index is currently trying to bounce from support at its 200-dma. Meanwhile the OSX oil services index is trying to rebound from technical support at its 100-dma. Likewise shares of UPL are trying to bounce from its support near $50. So far UPL has been unsuccessful in breaking out from its bearish trend of lower highs. Yet the technical picture suggests that the stock is nearing a bullish move higher. The MACD is close to a new buy signal and the shorter-term stochastics and RSI look ready to move higher as well. We are going to stick to our plan with a trigger to buy calls at $55.05. A move over $55.00 should reverse the P&F chart into a new buy signal. If we are triggered then we'll target a rally into the $59.00-60.00 range, where UPL will probably encounter technical resistance at its 50-dma (59.77).

Suggested Options:
We are suggesting the April calls.

BUY CALL APR 50 UPL-DJ open interest=1263 current ask $5.10
BUY CALL APR 55 UPL-DK open interest=1791 current ask $2.55

Picked on March xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 05/09/06 (unconfirmed)
Average Daily Volume = 1.7 million

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Valero Energy - VLO - close: 53.54 change: +0.28 stop: 53.49

We are still in a wait and see mode with VLO. The oil sector indices look ready for a rebound but crude oil is testing support in the $59-60 region and could move lower. Our plan with VLO is to catch a breakout over resistance in the $57.00-57.50 range with a trigger at $57.55. We are going to stick to the plan for now. If triggered we'll target a move into the $62.50-63.00 range. We would also keep an eye out for a dip to and bounce from round-number support at the $50.00 level, which should be bolstered by technical support with its 200-dma.

Suggested Options:
VLO is not currently near our trigger to buy calls. If triggered then we'd suggest the April or June calls.

Picked on March xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 05/02/06 (unconfirmed)
Average Daily Volume = million
 

Put Updates

Amgen - AMGN - close: 73.49 change: -0.09 stop: 75.05

Be careful here. AMGN and the biotech sector did under perform the market on Friday but the rally in the major indices has made us more wary. We would not be surprised to see AMGN bounce back toward short-term resistance near $75.00 before heading lower if it heads lower. Other than that we don't see any change from our Thursday play description so we're reposting it here:

The BTK biotech index's longer-term trend is still up but short-term the sector index has weakened and its technical oscillators point lower. Dragging on the sector index is one of its major components AMGN. Shares of AMGN have been trading under a trendline of lower highs since the November 2005 peak. The recent failed rally near its 50-dma and 200-dma has finally produced a new MACD sell signal. The Point & Figure chart for AMGN currently points to a $60 target. We are going to suggest puts here under $75.00. Our short-term target is the $70.10-70.00 range. More aggressive traders might want to aim lower and use a wider stop loss.

Suggested Options:
We are suggesting the April puts.

BUY PUT APR 75 YAA-PO open interest=10949 current ask $2.90
BUY PUT APR 70 YAA-PN open interest=14573 current ask $0.95

Picked on March 09 at $ 73.58
Change since picked: - 0.09
Earnings Date 04/20/06 (unconfirmed)
Average Daily Volume = 10.1 million

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KB Home - KBH - close: 63.24 chg: +1.06 stop: 68.05

Interest-rate sensitive stocks, like the homebuilders, saw their descent pause on Friday. We suspect this is just a speed bump on the way down since it is widely accepted that rates will continue higher. We would watch for a failed rally in KBH under $65.00 and under its simple 10-dma as a new bearish entry point. Our target is the $60.50-60.00 range.

Suggested Options:
Look for the failed rally before considering new positions. We like the April puts.

Picked on March 06 at $ 64.75
Change since picked: - 1.51
Earnings Date 03/22/06 (confirmed)
Average Daily Volume = 1.9 million

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Phelps Dodge - PD - close: 137.32 change: +4.42 stop: 140.05

Watch out! We may have been wrong with PD or the stock has just experienced some short covering fueled by the market rebound this Friday. Overall the pattern hasn't changed. PD is still in a six-week bearish trend and the stock's long-term pattern suggests it will retrace toward the $124 region. However, Friday's move is a big warning flag for the bears. Volume was strong, well above the daily average, and PD produced a bullish engulfing candlestick pattern on Friday. These patterns are typically seen as one-day (bullish) reversal patterns. PD still has potential resistance at $140.00 and its 100-dma (139.47) but if the broader market continues higher on Monday then PD could breakout! We are not suggesting new bearish positions at this time and honestly more conservative traders, if you opened positions on Friday, you might want to consider exiting early and limiting your losses. Don't forget that PD splits 2-for-1 and should begin trading at its post-split price on Monday.

Suggested Options:
We are not suggesting new bearish positions in PD at this time.

Picked on March 09 at $132.90
Change since picked: + 4.42
Earnings Date 04/27/06 (unconfirmed)
Average Daily Volume = 2.8 million

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Unibanco Brasilrs - UBB - close: 79.35 chg: +1.91 stop: 83.26

Financial stocks rebounded on Friday and that helped fuel a 2.4% bounce in shares of UBB. The overall trend in UBB remains bearish but we'd look for a new decline under $77.50 before considering new bearish positions. We're reposting our original play description from Thursday night here:

The momentum in shares of Brazilian bank stock UBB has finally reversed course. The stock struggled to breakout over the $90.00 level and in just a few days shares have broken their bullish support, the 50-dma and the $80.00 mark on above average volume. The Point & Figure chart points to a $65 target. We see Thursday's decline as a new bearish entry point due to the bearish engulfing candlestick pattern. We would suggest shorts here under the 50-dma (78.31) but more conservative traders may want to wait for a move under $77.00 before initiating positions. Our target is the $71.50-70.00 range.

Suggested Options:
We are not suggesting new bearish positions at this time. Wait for a new move under $77.50.

Picked on March 09 at $ 77.44
Change since picked: + 1.91
Earnings Date 02/16/06 (confirmed)
Average Daily Volume = 755 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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Encana Corp. - ECA - close: 42.86 chg: +0.06 stop: n/a

Oil stocks could go either way next week. The OIX and OSX indices look ready to bounce from technical support at their 200-dma and 100-dma, respectively. Yet crude oil has fallen back toward support in the $59-60/barrel region and looks ready to slip even lower. Thus it really isn't a surprise that ECA churned sideways in a tight range on Friday halfway between resistance near $45 and support near $40. 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.

Suggested Options:
We are not suggesting new strangle positions in ECA.

Picked on January 10 at $ 45.56
Change since picked: - 2.70
Earnings Date 02/15/06 (confirmed)
Average Daily Volume = 4.4 million

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Loews Corp. - LTR - close: 95.04 change: +0.38 stop: n/a

Time is running out for our speculative, high-risk strangle play in LTR. We have five days left before March options expire. We are not suggesting new strangle positions.

Suggested Options:
We are not suggesting new strangle positions in LTR.

Picked on February 13 at $ 95.72
Change since picked: - 0.68
Earnings Date 02/16/06 (confirmed)
Average Daily Volume = 513 thousand

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Ryland Group - RYL - close: 65.71 change: +0.88 stop: n/a

Volume was a little bit stronger than normal on Friday's oversold bounce in RYL. We would not be surprised to see a bounce toward $68.00. We are not suggesting new strangle positions at this time. 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.

Suggested Options:
We are not suggesting new strangle positions in RYL.

Picked on January 22 at $ 75.19
Change since picked: - 9.48
Earnings Date 01/24/06 (confirmed)
Average Daily Volume = 1.1 million
 

Dropped Calls

None
 

Dropped Puts

Apple Computer - AAPL - cls: 63.19 change: -0.74 stop: 70.11

Target achieved. AAPL continued to sink on Friday and hit an intraday low of $62.45. Volume was above average on the decline. Our target was the $63.00-62.00 range.

Picked on March 05 at $ 67.72
Change since picked: - 4.53
Earnings Date 04/19/06 (unconfirmed)
Average Daily Volume = 31.1 million

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Intl. Bus. Mach. - IBM - cls: 81.57 chg: +0.55 stop: 81.05

IBM is not cooperating with our put play. The stock is trying to breakout higher from its sideways consolidation. Shares are still struggling with resistance near $82.00 but the short-term trend has certainly grown more bullish. Our plan suggested buying puts if IBM traded at or below our trigger of $78.89 and that never occurred. We're choosing to drop IBM as a bearish candidate for now.

Picked on March xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 04/18/06 (unconfirmed)
Average Daily Volume = 6.2 million
 

Dropped Strangles

Building Materials - BMHC - cls: 68.66 chg: +3.07 stop: n/a

Ouch! Friday's rebound in BMHC took a chunk out of the March put options. The stock is still trading under resistance at the $70.00 level but if the broader market indices continue higher next week then BMHC could rebound toward its 50-dma or merely churn sideways. Either action would spell doom for any remaining value in the March $70 puts (BGU-ON). More conservative traders may just want to exit here especially before the stock's 2-for-1 split coming on Tuesday. After the split BMHC's volatility will likely decline, which would further impede our chances for shares to sink low enough and allow us to exit near breakeven. This is the course of action we're suggesting - to exit now. More aggressive traders might want to keep the play open and cross their fingers for a big decline next week before option expiration.

Picked on December 18 at $ 80.95
Change since picked: -12.29
Earnings Date 02/07/06 (confirmed)
Average Daily Volume = 527 thousand
 

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