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Call Updates

Autoliv - ALV - close: 56.51 change: -0.17 stop: 54.99

The good news here is that ALV's decline appears to have stalled near $56.50. We were expecting a dip toward $56.00 or even the 50-dma and Friday would have been a great excuse to sell the stock given the market weakness. We're cautiously optimistic that most of the selling is over. However, we'd still wait and watch for a dip toward $56.00, better yet, a bounce from $56.00 as the next potential entry point to buy calls. Guard your stop losses. The damage done during last week's sell-off has turned many of ALV's technical indicators bearish. Our mid-June target is the $62.50-63.00 range.

Suggested Options:
We are not suggesting calls at this time. Wait for the next entry point. Our preference is the June calls.

Picked on May 04 at $ 57.53
Change since picked: - 1.02
Earnings Date 04/27/06 (confirmed)
Average Daily Volume = 513 thousand

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B P Prudhoe Bay - BPT - close: 72.74 chg: -1.51 stop: 72.45

Unfortunately, the oil stocks were unable to escape the market-wide sell-off on Friday. We're now facing a worse-case scenario with the stock hitting our trigger on Thursday and failing to hold the bullish breakout. So far BPT has held minor support near $72.50 but odds are really good, if the markets show any weakness on Monday morning, we'll be stopped out at $72.45. We would keep an eye on BPT for a dip toward support near $70.00. A bounce from $70.00 could be used as a new bullish entry point down the road. We remain bullish on the oil sector once this correction ends.

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

Picked on May 11 at $ 75.05
Change since picked: - 2.31
Earnings Date 00/00/00 (unconfirmed)
Average Daily Volume = 120 thousand

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Nexen - NXY - close: 57.38 chg: -2.14 stop: 56.75

NXY is another wounded oil stock that's experienced some profit taking in the last couple of days. Fortunately, we're still on the sidelines. Our strategy is to use a trigger at $61.75 to buy calls. We're going to stick to that plan for now. However, we'll be watching for a bounce from $55.00 and/or technical support at its 100-dma as an alternative entry point.

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

Picked on May xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 07/13/06 (unconfirmed)
Average Daily Volume = 500 thousand

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Omnicom - OMC - close: 91.81 chg: +0.19 stop: 89.99

We continue to be surprised by OMC's relative strength. The stock isn't showing any weakness compared to the rest of the market. We're going to stick by our plan for now but traders may want to think twice about entering new call positions with the major averages sinking. We want to catch any upward breakout so we're suggesting a trigger to buy calls at $92.05. If triggered our target will be the $97.50-98.00 range. The P&F chart is very bullish with a $110 target.

Suggested Options:
We are suggesting the June or July calls. You pick which strike works best for you. Our trigger to buy calls is $92.05.

BUY CALL JUN 90.00 OMC-FR open interest=787 current ask $3.20
BUY CALL JUN 95.00 OMC-FS open interest=361 current ask $0.75

BUY CALL JUL 90.00 OMC-GR open interest=1732 current ask $4.20
BUY CALL JUL 95.00 OMC-GS open interest= 384 current ask $1.60

Picked on May xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 07/25/06 (unconfirmed)
Average Daily Volume = 1.1 million

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Red Hat - RHAT - close: 29.52 chg: -0.51 stop: 28.99

The sell-off in tech stocks continued on Friday and RHAT fell 1.69% to close under the $30.00 mark. Short-term technical oscillators are bearish and we're not suggesting new positions at this time. We'd like to see a bounce near $29.00 or its 50-dma near $29.15 but we are not suggesting new plays until RHAT trades back over $31.00. Our target is the $34.75-35.00 range.

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

Picked on May 04 at $ 31.11
Change since picked: - 1.59
Earnings Date 06/27/06 (unconfirmed)
Average Daily Volume = 3.4 million
 

Put Updates

Amazon.com - AMZN - close: 32.73 chg: -0.80 stop: 35.51

The selling in AMZN continues and the stock lost another 2.38% on Friday. This is a new one-year low for the stock. Our target is the $31.00-30.75 range. We see no changes from our previous updates.

Suggested Options:
We're not suggesting new positions.

Picked on May 01 at $ 34.85
Change since picked: - 2.12
Earnings Date 07/25/06 (unconfirmed)
Average Daily Volume = 6.3 million

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Apollo Group - APOL - close: 52.26 chg: -0.32 stop: 55.05

APOL is a new play from our Thursday night newsletter. We do not see any changes so we're reposting the original play description here:

We are going to try again with APOL as a bearish candidate. We tried a few weeks ago but shares never broke support at $50.00 so they never hit our trigger to buy puts. We're going to try using a trigger again. The stock has produced two failed rallies under technical resistance at its descending 100-dma in the last couple of weeks. Plus, the hourly chart shows a bearish head-and-shoulders pattern with the neckline (support) near $52.00). We're going to suggest a trigger to buy puts at $51.75. There is probably some support near $50.00 but our target will be the March lows. We'll plan to exit in the $47.75-47.50 range.

Suggested Options:
We are suggesting the June puts. We do not want to hold over the late June earnings report. Our trigger is at $51.75.

BUY PUT JUN 55.00 OAQ-RK open interest=236 current ask $3.50
BUY PUT JUN 50.00 OAQ-RJ open interest=193 current ask $0.85

Picked on May xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 06/22/06 (unconfirmed)
Average Daily Volume = 2.1 million

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Black Box - BBOX - close: 44.39 chg: -1.02 stop: 46.55

BBOX is a new play from the Thursday night newsletter. Shares broke down under support at $45.00 on Friday and hit our trigger to buy puts at $44.85. We do not see any changes from our new play description so we're reposting it here:

The networking sector took a blow when networking giant CSCO recently issued cautious comments about their quarter. Thursday saw a 3.2% sell-off in the NWX networking index, which helped push BBOX to a 5% loss. After three months of consolidating sideways we suspect that BBOX is poised to move lower. Thursday's decline ended with a breakdown under technical support at its 200-dma. If shares break the $45.00 level it will produce a new quadruple-bottom breakdown sell signal on its P&F chart. We are going to suggest a trigger to buy puts at $44.85. If triggered our target will be the 40.75-40.00 range. FYI: we would consider this play somewhat aggressive since we find stocks with low daily volume and low option volume somewhat dangerous!

Suggested Options:
We are suggesting the June puts. We do not want to hold over the June 1st earnings report. Our trigger is $44.85.

BUY PUT JUN 45.00 QBX-RI open interest= 63 current ask $3.10
BUY PUT JUN 40.00 QBX-RH open interest= 30 current ask $1.15

Picked on May 12 at $ 44.85
Change since picked: - 0.46
Earnings Date 06/01/06 (confirmed)
Average Daily Volume = 90 thousand

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Bear Stearns - BSC - cls: 134.50 chg: -2.98 stop: 142.55

The broker stocks, and BSC, have been big targets for profit taking and the group lost 2.2% on Friday. The volume on BSC's decline on Friday was above average. We do not see any changes form our new play description from Thursday night so we're reposting it here:

It is amazing what a few days of trading can do to change the situation. A week ago BSC was bouncing from support at its 50-dma and look poised to challenge its highs and beyond. Now the stock is breaking down and looks ready to sink toward support near $130.00. The XBD broker-dealer index has produced a similar failed rally/bounce and breakdown. We are suggesting puts with BSC under $138.00. Since BSC can be somewhat volatile more conservative traders may want to wait for a decline under $137 before initiating positions. More conservative types may also want to plan an exit at the rising 100-dma, which may act as technical support. We're going to target a decline into the $132.00-130.00 range. We suspect that the $130 level will act as support since it close to the 38.2% Fibonacci retracement level of its October-April run up.

Suggested Options:
We are suggesting the June puts but we plan to exit ahead of the June earnings report.

BUY PUT JUN 140.00 BSC-RH open interest=2372 current ask $5.60
BUY PUT JUN 135.00 BSC-RG open interest= 434 current ask $3.20

Picked on May 11 at $137.48
Change since picked: - 2.98
Earnings Date 06/15/06 (unconfirmed)
Average Daily Volume = 1.2 million

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IDEXX Labs - IDXX - close: 77.03 chg: -0.90 stop: 80.05

IDXX is off to a good start. Shares lost 1.15% on Friday following Thursday's failed rally. We do not see any changes from Thursday's new play description so we're reposting it here:

The tide appears to have turned for IDXX. Shares peaked in late March, filled the gap in April, broke down under support at $80.00 two weeks ago, and broke down under support at its rising 100-dma following today's failed rally under the 10-dma near $80.00. The P&F chart is bearish and points to a $70 target. We think shares can slip to the rising 200-dma although we're keeping a watchful eye on potential support at $75.00. We're going to suggest puts with IDXX under $78.00. Our target will be the $72.50-73.00 range for now. We'll adjust it as the 200-dma rises.

Suggested Options:
We are suggesting the June puts although July puts are also available and currently have more open interest.

BUY PUT JUN 80.00 UID-RP open interest= 61 current ask $3.80
BUY PUT JUN 75.00 UID-RO open interest= 60 current ask $1.30

Picked on May 11 at $ 77.93
Change since picked: - 0.90
Earnings Date 04/28/06 (confirmed)
Average Daily Volume = 125 thousand

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Merrill Lynch - MER - close: 72.74 chg: -1.26 stop: 77.26

The high-volume sell-off continues in shares of MER. We do not see any changes from our Thursday night new play description so we're reposting it here:

This looks like a pretty attractive entry point to buy puts on MER. The stock broke down from its multi-month up trend a couple of weeks ago but now we have the benefit of seeing the oversold bounce fail near its 50-dma. Volume was pretty strong on Thursday's decline and MER closed under potential support at $75.00 and its 100-dma. The P&F chart points to a $67 target. We're going to target a decline into the $70.50-70.00 range.

Suggested Options:
We are suggesting the June puts although July puts would also work well and appear to have more open interest.

BUY PUT JUN 75.00 MER-RO open interest=1760 current ask $3.30
BUY PUT JUN 72.50 MER-RB open interest=1191 current ask $1.95
BUY PUT JUN 70.00 MER-RN open interest= 996 current ask $1.10

Picked on May 11 at $ 74.00
Change since picked: - 1.26
Earnings Date 07/18/06 (unconfirmed)
Average Daily Volume = 4.7 million

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Research In Motion - RIMM - cls: 74.26 chg: +1.19 stop: 77.55*new*

We are suggesting caution here. RIMM failed to participate in the market-wide sell-off this Friday. Instead shares bounced higher adding 1.6%. We are not suggesting new bearish positions and we'll try and reduce our risk by lowering the stop loss to $77.55. Our target remains the $71.00-70.00 range. More conservative traders may want to exit near $71.70-71.60 due to the simple 200-dma.

Suggested Options:
We are not suggesting new put positions in RIMM at this time.

Picked on April 30 at $ 76.63
Change since picked: - 2.37
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: 115.06 chg: -2.21 stop: n/a

The Dow Jones Transportation sector suffered an uncommon triple-digit loss on Friday losing more than 2%. Shares of FDX followed with a 1.88% decline putting it back at the $115 level just above technical support at its 50-dma. If you were looking for a new entry point to consider a strangle position then this is it! Our previously suggested entry zone was $114.50-115.50. 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 but you could probably enter a June strangle today around $2.25.

Suggested Options:
We were suggesting the June $120 calls and the June $110 puts.

Picked on April 30 at $115.13
Change since picked: - 0.07
Earnings Date 06/21/06 (unconfirmed)
Average Daily Volume = 1.4 million
 

Dropped Calls

Cleveland Cliffs - CLF - close: 93.75 chg: -2.54 stop: 94.45

Profit taking in the metal and mining stocks on Friday was pretty heaving. The XAU index lost more than four percent. Shares of CLF closed down 2.6% but bounced off its lows of the session. We warned readers on Thursday that CLF had produced a bearish reversal pattern but we didn't expect shares to break through support at $95.00. We've been stopped out at $94.45. We would keep an eye on CLF for a move past $95.00 as a potential entry point again.

Picked on May 08 at $ 95.11
Change since picked: - 1.36
Earnings Date 04/26/06 (confirmed)
Average Daily Volume = 692 thousand

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Goldman Sachs - GS - cls: 156.11 chg: -3.17 stop: 157.95

We warned readers on Thursday that the drop under $160 was bad news and suggested an early exit. The profit taking continued into Friday and the XBD index lost 2.26%. Shares of GS followed with a 1.99% decline to close under technical support at its rising 50-dma. If GS moves under $155 it will look like a bearish candidate.

Picked on May 07 at $164.39
Change since picked: - 8.28
Earnings Date 06/13/06 (unconfirmed)
Average Daily Volume = 3.9 million

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Schlumberger - SLB - cls: 68.85 chg: -2.66 stop: 69.59

The profit taking in the oil services sector was heavy. The OSX oil services index fell more than 4% on Friday rivaling the decline in the metals. SLB was not spared and lost 3.7% to breakdown below the $70.00 level. The stock's MACD indicator has produced a new sell signal. We've been stopped out at $69.59.

Picked on May 10 at $ 73.06
Change since picked: - 4.21
Earnings Date 07/21/06 (unconfirmed)
Average Daily Volume = 11.2 million
 

Dropped Puts

Atheros Comm. - ATHR - close: 22.01 chg: +0.30 stop: 25.26

Target achieved. ATHR slipped to 20.55 during the carnage on Friday. Our target was the $21.00-20.50 range. We expect shares to find some support at $20.00 or its 100-dma. Keep an eye on any failed rally under $25.00 or its 10-dma as a potential entry point for new bearish positions.

Picked on May 01 at $ 23.77
Change since picked: - 1.76
Earnings Date 04/24/06 (confirmed)
Average Daily Volume = 1.6 million
 

Dropped Strangles

None
 

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