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Call Updates

Cummins Inc. - CMI - cls: 107.80 change: -0.26 stop: 102.49

The overall pattern for CMI remains bullish but short-term the stock might be suggesting its ready for a pull back. CMI has been rising in a channel for weeks now and its MACD indicator on the daily chart is nearing a new buy signal. Yet some of the short-term oscillators look overbought from last week's rally. Friday's pull back saw the stock bounce twice from the $107.25 level. However, we don't expect this level to hold if the major indices see any profit taking next week. Watch for a dip toward the $105 level, which should be stronger support, as a new bullish entry point. Our short-term target is the $109.75-110.00 range. The $110 level looks like short-term resistance but more aggressive traders might want to set their target higher.

Suggested Options:
We are not suggesting new bullish positions at this time. Watch for a bounce from the $105 region.

Picked on March 13 at $105.25*gap higher*
Change since picked: + 2.55
Earnings Date 04/20/06 (unconfirmed)
Average Daily Volume = 867 thousand

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Hartford Fin. Srv. - HIG - cls: 82.60 chg: -0.56 stop: 79.95

The trading action in HIG on Friday doesn't look good for the bulls. The stock has produced what looks like a bearish engulfing candlestick pattern and a failed rally at its simple 50-dma. Put the two together and signs definitely point to a bearish reversal. We would expect shares to consolidate lower toward last week's support near $81.00 or technical support at its 200-dma near $80.00. Weighing on shares of HIG was news from rivals AIG and STA. Thursday night AIG reported earnings that missed analysts' estimates. Meanwhile there were stories/rumors that STA was considering a merger with a European company. Normally one might think merger news (to be acquired) would be good for the stock but shares of STA closed lower on Friday. If you consider this earnings news from AIG and the reaction in shares of HIG then more conservative traders may just want to exit early right here to limit their losses. We are not suggesting new plays. The two potential entry points we will be watching for is a bounce from $80.00 or a move over $84.00 (and its 50-dma). Our target is the $87.50-90.00 range.

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

Picked on February 14 at $ 82.12
Change since picked: + 0.48
Earnings Date 04/27/06 (unconfirmed)
Average Daily Volume = 1.1 million

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Hydril - HYDL - close: 73.86 change: -1.53 stop: 69.49

Oil stocks pulled back on Friday following a decline in crude oil prices. We believe this is probably just normal profit taking after a week of gains. Shares of HYDL were looking a little short-term overbought after its rebound from the 200-dma. We remain bullish on HYDL but shares could be ready for a minor consolidation. Watch for a dip into the $72.00-70.00 range as a new bullish entry point. Our target is the $77.50-78.00 range.

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

Picked on March 12 at $ 70.23
Change since picked: + 3.63
Earnings Date 04/26/06 (unconfirmed)
Average Daily Volume = 289 thousand

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ITT Industries - ITT - close: 55.92 change: +1.18 stop: 51.69

The bullish breakout continues in shares of ITT. On Tuesday last week ITT broke out from a six-month neutral pennant-shaped pattern of higher lows and lower highs. The stock has seen a very strong follow through with volume coming in above average on the four-day rally. This is all very positive and so far ITT doesn't show any signs of slowing. However, nothing goes up in a straight line and the stock is looking a little short-term overbought. We need to prepare ourselves for a little consolidation in ITT. Of course the stock could surprise us and post another gain on Monday with the potential of hitting our target in the $57.00-58.00 range. We're not suggesting new bullish positions in ITT at this time.

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

Picked on March 15 at $ 53.84
Change since picked: + 2.08
Earnings Date 04/28/06 (unconfirmed)
Average Daily Volume = 1.4 million

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Macerich Co. - MAC - close: 74.34 change: +0.52 stop: 69.95

Perfect! MAC has filled the gap from Thursday morning and traders bought the dip on Friday with shares rebounding higher on above average volume. This looks like a new bullish entry point in MAC. Our target is the $79.00-80.00 range. The Point & Figure chart is bullish with a double-top breakout buy signal pointing to an $87 target.

Suggested Options:
We would suggest the April or June calls.

BUY CALL APR 70 MAC-DN open interest= 7 current ask $5.40
BUY CALL APR 75 MAC-DO open interest=49 current ask $2.00

BUY CALL JUN 70 MAC-FN open interest=27 current ask $6.40
BUY CALL JUN 75 MAC-FO open interest= 7 current ask $3.20

Picked on March 16 at $ 74.05
Change since picked: + 0.29
Earnings Date 05/16/06 (unconfirmed)
Average Daily Volume = 371 thousand

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Altria Group - MO - close: 73.55 chg: -0.35 stop: 71.85

We are growing more wary of the relative weakness in shares of MO. The stock has been down fractionally the last three days in a row. Short-term technical oscillators are turning bearish. We would watch for a bounce from the $73.00 level as a new bullish entry point or more conservative traders can wait for a new move over $74.50 to buy calls again. The P&F chart remains bullish and points to a triple-digit target for the stock. Our target is the $77.50-78.00 range.

Suggested Options:
We are not suggesting new bullish plays at this time. Watch for a bounce from the $73.00 level.

Picked on March 14 at $ 74.11
Change since picked: - 0.59
Earnings Date 04/19/06 (unconfirmed)
Average Daily Volume = 8.1 million

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Silicon Labs - SLAB - close: 47.81 change: +0.23 stop: 45.95

This has been a volatile week for the semiconductors. On Monday the SOX semiconductor index finally dipped toward round-number support at the 500 level and technical support at the 100-dma. Tuesday saw the SOX rebound sharply from this support. Wednesday the index failed near its descending 10-dma. Thursday the index crashed under support after KLIC issued negative comments that sank the sector. Friday saw the SOX try and bounce but failed at old support, now new resistance, at the 500 level. Meanwhile Intel (INTC), the largest chip stock, continues to sink to new two-year lows. Before Thursday's bearish reversal in the group we were expecting a bit more of a rebound and SLAB looked like a good candidate to catch any strength in the semiconductor sector. Thus far SLAB is holding on to its bullish pattern with an intraday bounce on Friday from rising support at the 50-dma. However, we are going to stick to our plan and wait for a breakout over resistance near $51.00. We're suggesting that readers use a trigger at $51.05 to buy calls. If triggered we will target a rally into the $54.90-55.00 range. More aggressive traders may want to target the $58.00-60.00 range. Should SLAB close under its 50-dma we'll drop it as a bullish candidate.

Suggested Options:
We are not suggesting new bullish positions at this time. Watch for the breakout over resistance.

Picked on March xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 04/26/06 (unconfirmed)
Average Daily Volume = 1.2 million

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Sunoco Inc. - SUN - close: 79.61 change: -1.76 stop: 74.99

A pull back in crude oil on Friday sparked some profit taking in the oil sector after a week of gains. SUN was not excluded and lost just over 2%, which almost erased the gains from Thursday. We would have expected the $80.00 mark and broken resistance at the 100-dma to act as new support. Unfortunately, they did not act as support and SUN may dip back toward the $77.80-77.50 level before trying to rebound. We are not suggesting new bullish positions at this time. Wait for a new move over $80.25 before considering new calls. More aggressive traders might want to buy a bounce from the $77.50 region. More conservative traders can wait for a breakout over the 50-dma (near $82). Our target is the $87.50-90.00 range. More conservative traders may want to plan an exit near $85.00, which could act as round-number resistance. The Point & Figure chart is bullish with a $96 price target.

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

Picked on March 16 at $ 80.26
Change since picked: - 0.65
Earnings Date 04/27/06 (unconfirmed)
Average Daily Volume = 2.4 million

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Toyota Motor Corp. - TM - close: 108.20 chg: +0.27 stop: 104.75

Our relative strength/momentum play in TM is still creeping higher. The stock is struggling a little bit with resistance in the $109.00 region but the pattern remains bullish. TM has a history of bouncing from its rising 50-dma and its MACD on the daily chart has produced a new buy signal. We are not suggesting new positions at this time but should TM bounce from the $107.50 level again traders could use the move as a new entry point. Our target is the $112.50-115.00 range. Traders with a longer-term horizon may want to aim higher.

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

Picked on March 12 at $106.68
Change since picked: + 1.52
Earnings Date 02/07/06 (confirmed)
Average Daily Volume = 438 thousand

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Valero Energy - VLO - close: 57.86 change: -0.66 stop: 53.49

VLO felt the same profit taking that hit shares of SUN (see above). After a week of gains the stock was ready for a consolidation. Watch for a dip to and a bounce from the $57.00 level or the 50-dma near $56.50 as a new bullish entry point in VLO. Our target is the $62.50-63.00 range. Thursday's move over $58.00 has produced a new P&F chart buy signal that points to a $72 target.

Suggested Options:
We are not suggesting new plays at this time. Should VLO produce another entry point we'd choose calls from April or June strikes.

Picked on March 15 at $ 57.55
Change since picked: + 0.31
Earnings Date 05/02/06 (unconfirmed)
Average Daily Volume = 10.7 million
 

Put Updates

None
 

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: 47.94 chg: -0.17 stop: n/a

We have a month left before April options expire. For this strangle play in ECA to be a success we need to see the stock rise to more than $53.50 or fall to under $36.50. Currently the stock is flirting with a breakout over its five-month trendline of resistance. 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 plays in ECA.

Picked on January 10 at $ 45.56
Change since picked: + 2.38
Earnings Date 02/15/06 (confirmed)
Average Daily Volume = 4.4 million

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Ryland Group - RYL - close: 70.53 change: +1.22 stop: n/a

We have one month left before April options in our RYL strangle expire. For this play to work out we need to see RYL trade under $63.00 or above $87.00 by April expiration. The stock has obviously been leaning toward the put side but the homebuilders have produced a strong rebound over the last week. More conservative traders may want to plan an early exit to recoup some trading capital. 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 plays in RYL.

Picked on January 22 at $ 75.19
Change since picked: - 4.66
Earnings Date 01/24/06 (confirmed)
Average Daily Volume = 1.1 million
 

Dropped Calls

None
 

Dropped Puts

KB Home - KBH - close: 67.28 chg: +0.54 stop: 68.05

Bullish comments from William Lyon Homes (WLS) and a strong market reaction helped fuel another day of gains for the homebuilders. KBH hit our stop loss at $68.05 closing the play.

Picked on March 06 at $ 64.75
Change since picked: + 2.53
Earnings Date 03/22/06 (confirmed)
Average Daily Volume = 1.9 million
 

Dropped Strangles

Loews Corp. - LTR - close: 100.05 change: +0.09 stop: n/a

Our high-risk, speculative play in LTR did not work out. The earnings report in mid February did not produce a big enough to reaction and when shares of LTR finally began to move they did not breakout from its trading range in time.

Picked on February 13 at $ 95.72
Change since picked: + 4.33
Earnings Date 02/16/06 (confirmed)
Average Daily Volume = 513 thousand
 

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