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Call Updates

Apple Computer - AAPL - close: 71.89 chg: +0.76 stop: 68.45

AAPL is not having the best week. It is true that shares posted a gain on the week but the stock seems to be under performing the broader market indices. So far AAPL has maintained its bullish trend of higher lows but it's struggling with resistance at the $72.00 level. Some of the short-term oscillators don't look too healthy. Yet we remain somewhat optimistic here. Our plan to buy calls over $72.25, which happens to be today's high and our previous trigger, still looks like a decent strategy. More patient traders can keep an eye on a dip and bounce from the $70.00 level, which should be supported by the 100-dma and the 10-dma. Technical traders may find comfort in AAPL's Point & Figure chart with its bullish triangle breakout buy signal and its $101 target. Plus, AAPL appears to have created a bullish or inverse head-and-shoulders pattern over the last few months. Our target is the $77.45-80.00 range.

Suggested Options
We are suggesting the June calls, which gives us six weeks.

BUY CALL JUN 67.50 QAA-FU open interest=2340 current ask $6.30
BUY CALL JUN 70.00 QAA-FN open interest=3106 current ask $4.60
BUY CALL JUN 72.50 QAA-FE open interest=3326 current ask $3.20
BUY CALL JUN 75.00 QAA-FO open interest=6216 current ask $2.20

Picked on May 04 at $ 72.25
Change since picked: - 0.36
Earnings Date 07/19/06 (unconfirmed)
Average Daily Volume = 36.0 million

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Autoliv - ALV - close: 58.15 change: +0.62 stop: 54.99

ALV turned in another gain on Friday breaking out over potential resistance at the $58.00 level. We don't see any changes from our new play description on Thursday night so we're reposting it here:

Honestly we are surprised by the strength in ALV. As an auto parts maker we would naturally think business is tough with the U.S. automakers struggling so much. However, ALV is a global company so maybe they're making up the difference with foreign automakers. To simplify matters "the trend is your friend" and ALV is bouncing from the bottom (support) of its rising channel (see chart). The MACD has just produced a new buy signal on its daily chart and the P&F chart is very bullish with a $94 target. We are going to suggest call positions now but traders can choose to either wait for a breakout over $58.00 or look for a dip back towards $56.00. Our short-term target is the $60.00 level but our mid-June target is the $62.50-63.00 range.

Suggested Options:
We are suggesting the June options. Double check these prices!

BUY CALL JUN 55.00 ALV-FK open interest=533 current ask $4.60
BUY CALL JUN 60.00 ALV-FL open interest= 23 current ask $1.75

Picked on May 04 at $ 57.53
Change since picked: + 0.62
Earnings Date 04/27/06 (confirmed)
Average Daily Volume = 513 thousand

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Red Hat - RHAT - close: 31.35 chg: +0.38 stop: 28.81

Friday proved to be a bullish day for most technology stocks and RHAT enjoyed a 1.22% gain to close at a new five-year high. In spite of this apparent strength we remain somewhat cautious with RHAT since the stock failed to maintain most of its gains and was sliding lower into the closing bell. We suspect that traders might get another chance to buy a dip near the $30.50-30.00 region soon even though broken resistance at $31.00 should now act as support. What we do find encouraging is the new triple-top breakout buy signal on RHAT's P&F chart. Our target is the $34.75-35.00 range.

Suggested Options
We are suggesting the June calls. We prefer the $30's.

BUY CALL JUN 30.00 RCV-FF open interest=23493 current ask $2.55
BUY CALL JUN 35.00 RCV-FG open interest= 3176 current ask $0.50

Picked on May 04 at $ 31.11
Change since picked: + 0.24
Earnings Date 06/27/06 (unconfirmed)
Average Daily Volume = 3.4 million
 

Put Updates

Affiliated Mangers - AMG - cls: 100.05 chg: +2.04 stop: 102.55

The bulls are making this painful for us. The market rally on Friday was partially lead by the financial stocks and the bounce in the broker-dealer/investment sector proved to be pretty strong. The XBD broker-dealer index rebounded 3.2% on Friday. This helped propel AMG to a 2% gain and a close back over round-number, psychological resistance at the $100.00 mark. Yet shares remain under their five-week trendline of lower highs. Plus, the P&F chart remains bearish and points to an $86 target. More conservative traders might want to think about exiting early given the strength in the market right now. We still see technical resistance overhead at the 50-dma near $101.50. However, one BIG concern for us right now is the weekly chart. The weekly chart has produced a "hammer" style candlestick, which tends to act as a bullish reversal pattern. At this time we're not going to suggest new put plays but a decline back under $99.00 could be used as a new entry point. Our target is the $92.00-90.00 range although the $95 level does look like short-term support. If AMG does continue to rally nimble traders may want to switch directions and buy calls on a breakout in the 102.50-103.00 zone.

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

Picked on May 01 at $ 97.45
Change since picked: + 2.60
Earnings Date 04/26/06 (confirmed)
Average Daily Volume = 637 thousand

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Amazon.com - AMZN - close: 35.04 chg: +0.57 stop: 36.51

Okay, now we are starting to grow a little worried. The rally today didn't really seem to affect shares of AMZN until this afternoon when the stock really began to rise. By the closing bell AMZN had gained 1.65% and closed over broken support, now new resistance, at the $35.00 level. Short-term technical oscillators have turned bullish. We are not suggesting new bearish positions at this time and more conservative traders may want to think about tightening their stop loss. One concern we have is the weekly chart has now produced what comes close to a bullish reversal candlestick. Our target remains unchanged at $31.00-30.75. The P&F chart remains bearish and points to a $17.00 target.

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

Picked on May 01 at $ 34.85
Change since picked: + 0.19
Earnings Date 07/25/06 (unconfirmed)
Average Daily Volume = 6.3 million

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Atheros Comm. - ATHR - close: 25.99 chg: +0.13 stop: 26.51

After Friday's big market rally we gave serious thought to exiting early in ATHR. More conservative traders may want to do the same. If the major indices continue to climb then odds are really good we'll be stopped out. We're choosing to keep the play open for now since ATHR under performed the market on Friday and remains under short-term resistance at the $26.25 level. We are not suggesting new bearish positions but should a drop under $25.00 present itself traders can use it as a new entry point.

Suggested Options
We are not suggesting new bearish plays in ATHR at this time.

Picked on May 01 at $ 23.77
Change since picked: + 2.22
Earnings Date 04/24/06 (confirmed)
Average Daily Volume = 1.6 million

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Research In Motion - RIMM - cls: 75.50 chg: +0.69 stop: 79.01

This past week was a somewhat volatile one for RIMM. Weeks after solving its legal dispute with NTP, RIMM is hit by a patent-infringement lawsuit by Visto, who is fresh from its own legal victory. RIMM is now counter-suing Visto but it probably won't remove the new black cloud over RIMM shares. A study of the daily chart shows that the bounce back from Monday's sell-off has been fueled by a steady decline in volume. This decline in volume suggests there is no strength behind the bounce. Traders can watch for a failed rally in the $76.50-77.00 region as a new bearish entry point. We want to remind readers that RIMM can be volatile and this should be considered an aggressive, higher-risk play. Our target is the $71.00-70.00 range.

Suggested Options
Wait and watch for a failed rally under $77.00 before considering new positions. We would play the June puts.

Picked on April 30 at $ 76.63
Change since picked: - 1.13
Earnings Date 07/06/06 (unconfirmed)
Average Daily Volume = 5.8 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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Fedex - FDX - close: 119.31 chg: +1.11 stop: n/a

Our strangle play produced a relatively good week. FDX offered us multiple chances to open plays in the $114.50-115.50 entry zone. Now it looks like the stock has verified its new direction. A sell-off in crude oil prices has sparked a big rally in the transports. The Dow Jones transportation index has rallied to a new all-time high. FDX broke out from its consolidation pattern and its daily chart has produced a new MACD buy signal. We're not suggesting new strangle positions at this time. We were suggesting the June $120 calls and the June $110 puts. This is a bet that FDX will trade significantly north of $120 or under $110 by June option expiration. Our estimated cost is about $2.60.

Suggested Options
We are not suggesting new strangles in FDX at this time.

Picked on April 30 at $115.13
Change since picked: + 4.18
Earnings Date 06/21/06 (unconfirmed)
Average Daily Volume = 1.4 million
 

Dropped Calls

Progressive - PGR - close: 107.43 chg: +0.43 stop: 103.95

It has been our plan to exit PGR on Friday afternoon to avoid holding over any earnings report expected next week. We're going to follow through with our strategy to exit early even though the date of the company's earnings report remains unconfirmed. We checked multiple sources and no one has a firm date yet but one source suggests that PGR could announce earnings next week and as early as this Monday. We do not want to hold over the announcement even though PGR's 4-for-1 stock split does not take affect until May 19th.

Picked on April 23 at $106.46
Change since picked: + 0.97
Earnings Date 05/08/06 (unconfirmed)
Average Daily Volume = 846 thousand
 

Dropped Puts

None
 

Dropped Strangles

None
 

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