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Call Updates

Anadarko Petrol. - APC - close: 101.10 chg: +0.70 stop: 96.95

Oil stocks did well earlier today on a surge in crude oil prices to $66 a barrel. Unfortunately, the rally in oil stocks began to fade this afternoon when the broader market sold-off on the FOMC notes regarding their view on further interest rate hikes. Shares of APC were able to break through resistance at $102 on an intraday basis and our play has been opened at $102.10. The failure to hold its gains today looks like a failed rally for APC so we'd be a bit cautious here about opening new positions. Watch for a bounce from $100.00 or a new move over $102.50 as a bullish entry point. Our target is the $109.50-110.00 range. We do not want to hold over the late April earnings report.

Picked on March 28 at $102.10
Change since picked: - 1.00
Earnings Date 04/28/06 (unconfirmed)
Average Daily Volume = 2.5 million

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Burlington NrthSanta Fe - BNI - cls: 81.07 chg: -0.66 stop: 78.99

The transportation stocks were feeling a little pressure today as oil futures rose to $66/barrel. BNI tried to rally this morning but failed near the $82 level. We remain bullish on BNI but we are cautious given the stock's decline back under the $82.00 level, which as broken resistance, should have acted as new support. Traders can choose to watch for a bounce from $80.00 or a new move over $82.50 as a bullish entry point to buy calls. Our target is the $87.50-90.00 range. We do not want to hold over BNI's late April earnings report.

Picked on March 27 at $ 82.51
Change since picked: - 1.44
Earnings Date 04/25/06 (unconfirmed)
Average Daily Volume = 2.1 million

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Bear Stearns - BSC - close: 137.55 change: -1.50 stop: 131.99

Financials were hit with profit taking after the Fed's interest rate announcement and the high-flying broker stocks were no exception. After a strong rebound from its recent lows and a test of resistance near $140 shares of BSC lost just over one percent today. We would look for the simple 10-dma (near 135.65) to act as support if the $137 level fails. Wait for a bounce before considering new bullish positions. Our target is the $144-145.00 range.

Picked on March 24 at $137.65
Change since picked: - 0.10
Earnings Date 06/15106 (unconfirmed)
Average Daily Volume = 1.1 million

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Cleveland Cliffs - CLF - close: 89.95 chg: -3.05 stop: 89.45

Ouch! CLF lost 3.2% today. Our confidence is starting to waver. Friday's breakout over $92.50 and its 100-dma and 50-dma is starting to look like a bull trap. The metal and mining stocks, as a group, were weak today after the U.S. dollar rallied on the FOMC news this afternoon. This could just be profit taking in the metals recent rally. Most analyst comments we heard today remained very bullish on the metals/mining group. Unfortunately, we might be stopped out at $89.45 before CLF rebounds. We're not suggesting new bullish positions at this time.

Picked on March 26 at $ 94.14
Change since picked: - 4.19
Earnings Date 04/26/06 (unconfirmed)
Average Daily Volume = 545 thousand

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Deere Co - DE - close: 78.90 change: +0.38 stop: 74.95

DE continues to show relative strength and the stock almost broke out above resistance at the $79.50 level. We would not suggest new positions here. Watch for a dip and bounce from the $77.50 region or a new high over $80.00. Our target is the $84.00-85.00 range. The P&F chart is bullish and points to a $112 target.

Picked on March 22 at $ 77.29
Change since picked: + 1.61
Earnings Date 05/16/06 (unconfirmed)
Average Daily Volume = 1.6 million

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Grainger W.W.Inc. - GWW - close: 74.92 change: +0.12 stop: 73.95

We do not see any change from our weekend update on GWW. We are suggesting a trigger to buy calls at $76.51. If triggered we'll target a rally into the $79.90-80.00 range. The P&F chart is bullish with a triple-top breakout buy signal pointing to a $90 target.

Picked on March xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 04/15/06 (unconfirmed)
Average Daily Volume = 449 thousand

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Lehman Brothers - LEH - close: 142.33 change: -4.37 stop: 140.79

LEH was hit hard by profit taking late this afternoon. It's almost as if the FOMC decision was a big flashing "sell now" signal for LEH investors. The intraday chart looks pretty nasty. The weakness did stall near LEH's rising 50-dma and shares are near recent support in the $142-141 area. We are not suggesting new bullish positions here. If there is any follow through tomorrow we would expect to be stopped out. However, watch for a bounce from the $140 mark as a potential new bullish entry point. If LEH breaks $140.00 then look for a decline toward the 100-dma near $135.

Picked on March 22 at $144.61
Change since picked: - 2.28
Earnings Date 06/14/06 (unconfirmed)
Average Daily Volume = 2.0 million

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MedcoHealth - MHS - close: 59.36 change: +0.82 stop: 57.95

It looks like traders are buying the dip toward the bottom of MHS' recent trading range. We would not suggest new positions until MHS trades over $60.00 or better yet over Monday's high at $60.64.

Picked on March 24 at $ 60.05
Change since picked: - 0.78
Earnings Date 04/25/06 (unconfirmed)
Average Daily Volume = 1.6 million

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Nabors Inds. - NBR - close: 69.83 chg: +1.53 stop: 64.99

NBR displayed plenty of relative strength today. The stock gapped higher to open at $68.85 and shares eventually drifted toward the $70.00 level. Our trigger to buy calls was at $68.75 so we have adjusted our entry point to this morning's open. The move looks pretty bullish given today's market weakness. However, traders have a choice. If you think NBR will pull back after testing the $70.00 level then wait for a dip back toward $68.00 and buy the dip. Otherwise we'd look for a move over $70.00 as the next entry point to go long. Our target is the $74.00-75.00 range. Please note that NBR is set to split 2-for-1 on April 18th. Our post-split target will be $37.00. We do not want to hold over the late April earnings report.

Picked on March 28 at $ 68.85*gap higher*
Change since picked: + 0.98
Earnings Date 04/27/06 (unconfirmed)
Average Daily Volume = 3.7 million

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Pantry Inc. - PTRY - close: 62.11 chg: -0.49 stop: 58.85

PTRY weathered the market weakness pretty well today. If the market continues south tomorrow then we'd watch for a dip toward $60.00 as the next bullish entry point to buy calls. Our target is the $67.00-68.00 range. We do not want to hold over the late April earnings report.

Picked on March 26 at $ 61.85
Change since picked: + 0.26
Earnings Date 04/27/06 (unconfirmed)
Average Daily Volume = 364 thousand

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Rio Tinto - RTP - close: 195.05 chg: -4.40 stop: 189.90

RTP was a casualty of the FOMC policy announcement driving the U.S. dollar higher, which prompted profit taking in the metals and then the mining stocks. We suspect that this is just profit taking but the action in RTP looks like a bearish failed rally (reversal) under the $200 level. The stock did close under its 50-dma and is barely holding on to round-number support/resistance at the $195 mark. We are not suggesting new bullish positions at the moment and more conservative traders may want to tighten stops or exit early. One could always jump back in on a move over $200.

Picked on March 26 at $198.60
Change since picked: - 3.55
Earnings Date 02/06/06 (confirmed)
Average Daily Volume = 326 thousand

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Silicon Labs - SLAB - close: 51.90 change: -0.34 stop: 47.65*new*

Semiconductors were a sore spot today with the SOX index losing more than 2% and falling back under the 500 level. The weakness was ignited by an earnings warning from Lexar (LEXR) but the sell-off worsened after the FOMC meeting. Shares of SLAB pulled back toward round-number support at $50.00 with a 3.1% decline. We warned readers to expect a dip. Now watch for a bounce. A move over $51.00 could be used as a new bullish entry point. We are raising our stop loss to $47.65, just under the rising 50-dma.

Picked on March 23 at $ 51.05
Change since picked: + 0.85
Earnings Date 04/26/06 (unconfirmed)
Average Daily Volume = 1.2 million

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Schlumberger - SLB - close: 124.58 chg: +1.63 stop: 118.99

SLB posted a gain today as crude oil futures rose past $66 a barrel. We are targeting a rally into the $129.75-130.00 range. The P&F chart is bullish and points to a $144 target. Please note that SLB is due to split 2-for-1 on April 10th. Our post-split target will be the $64.87-65.00 range. We do not want to hold over the April 21st earnings report.

Picked on March 23 at $123.02
Change since picked: + 1.56
Earnings Date 04/21/06 (unconfirmed)
Average Daily Volume = 6.2 million

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Toyota Motor Corp. - TM - close: 107.52 chg: -1.73 stop: 104.99

Hmm... we're a bit surprised by the weakness in TM. The stock was weak early on but sold off even more after the Fed's announcement. Yet in Japan the market's reversed early losses and closed higher. Volume continues to be very light, which doesn't suggest a lot of conviction either way. We are not suggesting new bullish positions at this time. Our target is the $112.50-115.00 range. Traders with a longer-term horizon may want to aim higher.

Picked on March 12 at $106.68
Change since picked: + 0.84
Earnings Date 02/07/06 (confirmed)
Average Daily Volume = 438 thousand

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Tenaris - TS - close: 178.09 chg: -5.16 stop: 177.79

Hmm... this doesn't look good for TS' upward momentum. The stock gapped lower this morning to open at $179 and the stock closed with a 2.8% loss. Volume on the move was pretty strong. Fortunately, we are still on the sidelines. If TS doesn't rebound soon we'll probably drop it as a bullish candidate. We are suggesting a trigger to buy calls at $186.75. If triggered we will target a rally into the $198-200.00 range, which is consistent with the bullish P&F chart target.

Picked on March xx at $xxx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 05/01/06 (unconfirmed)
Average Daily Volume = 553 thousand

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Valero Energy - VLO - close: 59.86 change: +0.44 stop: 54.49

VLO broke out over the $60.00 mark on an intraday basis. Unfortunately, the strength in the oil stocks began to fail late this afternoon when the broader market began to sell-off. We are not suggesting new positions at this time. Our target is the $62.50-63.00 range.

Picked on March 15 at $ 57.55
Change since picked: + 2.31
Earnings Date 05/02/06 (unconfirmed)
Average Daily Volume = 10.7 million
 

Put Updates

Biosite Inc. - BSTE - close: 49.82 chg: -1.24 stop: 52.55

Our bearish play with BSTE has been opened. The stock's consolidation narrowed into a very tight range today before finally crumbling after the Fed announcement hit the wires. Shares broke under round-number support at the $50.00 level and hit our trigger to buy puts at $49.75. Now that the play is open we are targeting a move into the $45.25-45.00 range. More conservative traders may want to wait for a move under $49.00 before initiating positions since the $49 level has been support in the past. Technicals have naturally turned bearish.

Picked on March 28 at $ 49.75
Change since picked: + 0.07
Earnings Date 03/25/06 (unconfirmed)
Average Daily Volume = 261 thousand

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Gannett Co Inc. - GCI - close: 58.90 chg: +0.05 stop: 61.76

GCI is still consolidating sideways after the breakdown below the $60 level. We suspect the trend will change soon when the stock hits the simple 10-dma shortly. Our bias is bearish given the breakdown and with overhead resistance at $60 but we're not going to suggest new positions until GCI trades under $59 again. Our target is the $55.25-55.00 range. Don't forget that we plan to exit ahead of the April 12th earnings report.

Picked on March 19 at $ 59.04
Change since picked: - 0.14
Earnings Date 04/12/06 (confirmed)
Average Daily Volume = 1.1 million
 

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: 47.08 chg: -0.50 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: + 1.52
Earnings Date 02/15/06 (confirmed)
Average Daily Volume = 4.4 million

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Ryland Group - RYL - close: 70.91 change: -0.58 stop: n/a

Good news. The homebuilders did not react well to the FOMC statement today. Shares of RYL have produced a failed rally under resistance near $72.50 and they've also produced a bearish engulfing candlestick pattern (a.k.a. bearish reversal). 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).

Picked on January 22 at $ 75.19
Change since picked: - 4.28
Earnings Date 01/24/06 (confirmed)
Average Daily Volume = 1.1 million
 

Dropped Calls

Altria Group - MO - close: 72.03 chg: -0.02 stop: 71.99

Shares of MO should have rallied more strongly today. An independent arbitrator ruled in favor of tobacco companies regarding a payment dispute with the U.S. government. The industry is due to pay a $6.5 billion payment next month but now it looks like tobacco companies might be able to reduce that payment by $1.2 billion. Shares of MO, which owns Phillip Morris, tried to rally a couple of times today but could not breakout over its two-week trendline of resistance. Eventually the stock did trade under $72.00 and hit our stop loss at $71.99.

Picked on March 14 at $ 74.11
Change since picked: - 2.08
Earnings Date 04/19/06 (unconfirmed)
Average Daily Volume = 8.1 million
 

Dropped Puts

None
 

Dropped Strangles

None
 

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