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Call Updates

Google - GOOG - close: 386.57 chg: -6.73 stop: 384.50

There was no follow through on the market's big Thursday afternoon bounce and there was no follow through for GOOG. The stock failed near $395, just under its simple 50-dma. By the closing bell GOOG had pretty much erased Thursday's gain altogether. We are currently sitting on the sidelines with a suggested trigger to buy calls at $401.00. We thought about yanking GOOG as a bullish candidate given the lack of a market bounce on Friday but we'll leave it on the play list for now. A breakout over $400 and the 50-dma might still be buy-worthy. The biggest risk is probably an intraday spike over $400 that hits our trigger and then reverses on us. This is an aggressive play and more conservative traders might want to use a tighter stop loss but beware GOOG's volatility. Currently the stock looks poised to fall back toward the $380-379 region. Aggressive traders might want to speculate on a bounce from its simple 200-dma (near $376) but we'd use a pretty tight stop. If we are triggered at $401 our target is the $440-445 range. Currently the P&F chart sports a buy signal with a $444 target.

Suggested Options:
We are not suggesting new plays at this time. Our trigger to buy calls is at $401.00. If triggered we prefer the July calls. Please note that on the Thursday night newsletter we printed an error with the June strikes. The correct July symbols are GOP-GR, GOP-GT, GOP-GB, GOP-GD.

Picked on June xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 07/20/06 (unconfirmed)
Average Daily Volume = 9.8 million

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United Tech. - UTX - close: 60.05 chg: -0.26 stop: 58.75

Danger! UTX followed the DJIA and failed to keep any sort of follow through high on Thursday's rebound. We would hesitate to open new bullish positions right here. If shares trade under the 100-dma near $59.85 then more conservative traders may want to exit early. We have our stop loss under Thursday's low, which was a bounce off its long-term trendline of support. Should UTX turn higher on Monday we'd probably look for a rise past 60.75 before considering calls. Our target is currently the $64.00-65.00 range. We do expect some resistance near $62.00 and its 50-dma. We do not want to hold over the July earnings report.

Suggested Options:
We are not suggesting new positions given the failure to rebound on Friday. If UTX does rebound on Monday we'd suggest the July calls.

Picked on June 08 at $ 60.13
Change since picked: - 0.26
Earnings Date 07/19/06 (unconfirmed)
Average Daily Volume = 3.7 million

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VF Corp. - VFC - close: 64.98 change: +0.49 stop: 61.84

VFC is showing some relative strength with a 0.75% gain on Friday. We are encouraged by the follow through on Thursday's rebound but we would not open new bullish positions given the bearish market environment. Should VFC see any profit taking we'd look for the $63.50-63.00 region to offer support. More conservative traders may want to tighten their stop loss. Our target is the $68.00-70.00 range. The Point & Figure chart is very bullish with a $90.00 target.

Suggested Options:
We are not suggesting new bullish positions in VFC due to the bearish market environment.

Picked on June 01 at $ 63.51
Change since picked: + 1.47
Earnings Date 07/25/06 (unconfirmed)
Average Daily Volume = 545 thousand
 

Put Updates

Amgen Inc. - AMGN - close: 67.64 chg: -0.77 stop: 69.55

This may be a good spot to consider new bearish plays in biotech stocks. The BTK biotech index just produced a new lower high and a failed rally under its descending 50-dma, which happens to have recently crossed the 200-dma, a very bearish development. Shares of AMGN continue to trade under their trend of lower highs and the stock produced another failed rally near its descending 50-dma. This is a new entry point to buy puts although more conservative traders may want to wait for a move under $66.75 as confirmation. Our target is the $62.65-62.50 range. The P&F chart for AMGN points to a $60 target.

Suggested Options:
We are suggesting the July puts. Please note that we do not want to hold over the July earnings report.

BUY PUT JUL 70.00 YAA-SN open interest=8332 current ask $3.40
BUY PUT JUL 67.50 YAA-SU open interest=7443 current ask $2.10
BUY PUT JUL 65.00 YAA-SM open interest=15630 current ask $1.20

Picked on June 05 at $ 67.48
Change since picked: + 0.16
Earnings Date 07/18/06 (unconfirmed)
Average Daily Volume = 8.9 million

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Franklin Res. - BEN - close: 86.96 chg: -0.63 close: 91.55

The broker-dealer investment-related stocks also failed to rebound on Friday. While the group (sector index) has produced a double-bottom looking pattern the failure to rebound makes things look pretty ugly. The technical picture on BEN is getting worse with the MACD about to produce a new sell signal. We have been suggesting a target in the $85.25-85.00 range. Given the market weakness and BEN's failure to rebound we're going to get more aggressive too. We're suggesting that traders sell half (or more) of your position at $85.25 and then sell the rest in the $82.50-81.50 region, which is closer to the bottom of BEN's bearish channel. The $85 level does look like support so be ready for an oversold bounce. The Point & Figure chart for BEN points to a $77 target.

Suggested Options:
If you plan to exit near $85 this isn't the best entry point. However, if you're targeting the bottom of BEN's channel then we would buy puts here. We'd suggest the July puts.

Picked on May 14 at $ 89.30
Change since picked: - 2.34
Earnings Date 07/27/06 (unconfirmed)
Average Daily Volume = 1.1 million

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Burlington Nrth.SntFe - BNI - cls: 72.28 chg: -1.84 stop: 77.55

We have good news to report with BNI. The early morning follow through higher on Friday morning reversed after it filled the gap from Thursday morning. Shares turned lower on Friday to produce what looks like a bearish engulfing candlestick. The MACD indicator has produced a new sell signal. There is still a chance for another bounce from support near $70 and its 200-dma but the weakness on Friday looks good for the bears. BNI has been trading lower in a bearish channel after breaking its long-term bullish pattern weeks ago. The P&F chart points to a $62.00 target. Our strategy with BNI involves two targets. We suggested readers sell part of their position at $70.50 (already hit) and then sell the rest of your position at $66.00 near the bottom edge of its bearish channel. However, we are going to adjust the bottom target to $67.00-66.85 to account for the 50% retracement level of BNI's previous bull run. Be advised that BNI is due to present at the upcoming transportation conference next week (June 15th).

Suggested Options:
If you're looking for a new position in BNI we would suggest the July puts. We do expect another bounce attempt at $70.

Picked on June 05 at $ 75.64
Change since picked: - 3.36
Earnings Date 07/25/06 (unconfirmed)
Average Daily Volume = 2.1 million

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Barr Pharma - BRL - close: 51.76 chg: -0.32 stop: 54.25

We do not have anything new to report on for BRL. The stock's oversold bounce from the May low is still slowly rolling over. The MACD is nearing a new sell signal. The P&F chart remains bearish but it is noteworthy that shares are near the P&F target. Volume has been pretty light the last couple of days. That may be a warning sign for the bears that a lot of the selling pressure may have already been exhausted. Keep an eye on the DRG index, which appears to have built a big bearish head-and-shoulders pattern and is nearing the neckline (support) around the 320 level. A breakdown in the DRG could help push BRL to new lows. Our target is the $48.00-47.50 range.

Suggested Options:
We are suggesting the July puts.

BUY PUT JUL 55.00 BRL-SK open interest= 339 current ask $4.20
BUY PUT JUL 50.00 BRL-SJ open interest=1204 current ask $1.45

Picked on June 05 at $ 52.20
Change since picked: - 0.44
Earnings Date 08/03/06 (unconfirmed)
Average Daily Volume = 1.1 million

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Dril Quip - DRQ - close: 74.75 chg: -0.72 stop: 80.05

The oil stocks joined the rest of the market and failed to see any follow through on Thursday's big afternoon bounce. Friday's session saw DRQ erase Thursday's gain. Volume was a bit light on Friday, which doesn't suggest a lot of conviction. DRQ remains long-term overbought and there is still plenty of room for profit taking. What concerns us is the ongoing drama with Iran. Some of the stories we noticed suggested that Iran is going to refuse the latest deal. That would put pressure on crude oil, which "should" help the oil stocks. Buying puts on DRQ is a little bit aggressive. The stock's P&F chart has resisted producing any sell signals thus far and shares have not yet broken technical support at their 100-dma. We listed DRQ as a put play with two targets. Our conservative target was $70.25, which has already been hit. Our aggressive target is the 100-dma but since that moving average is rising we have to adjust our lower target as it moves. Right now our aggressive target will be the $67.50-67.00 range. More conservative traders may want to use a tighter stop. We have a wide, aggressive stop above $80.00.

Suggested Options:
We would probably wait for a move under $74.00 or Friday's low before initiating new plays. We're suggesting the July puts.

BUY PUT JUL 75.00 DRQ-SO open interest= 81 current ask $5.50
BUY PUT JUL 70.00 DRQ-SN open interest=135 current ask $3.30

Picked on June 07 at $ 74.77
Change since picked: - 0.02
Earnings Date 08/02/06 (unconfirmed)
Average Daily Volume = 390 thousand

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Express Scripts - ESRX - close: 69.34 chg: -1.54 stop: 72.65

Good news! ESRX displayed some relative weakness on Friday and closed below the $70.00 level for the first time in months. This move helped the MACD indicator produce a new sell signal. We see this as a new entry point to buy puts. More conservative traders may want to wait for a decline under $69.15. We were suggesting two targets at $65.25 and at $60.50. The P&F chart points to a $62 target.

Suggested Options:
We are suggesting the July puts.

BUY PUT JUL 70.00 XTQ-SN open interest= 904 current ask $3.50
BUY PUT JUL 65.00 XTQ-SM open interest= 418 current ask $1.55

Picked on June 08 at $ 69.59
Change since picked: - 0.25
Earnings Date 07/26/06 (unconfirmed)
Average Daily Volume = 1.8 million

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Intl. Bus. Mach. - IBM - cls: 77.63 chg: +0.60 stop: 81.05

It's been a rough week for IBM. Shares produced a failed rally at their 21-dma near $81 on Wednesday and shares then fell to new eight-month lows on Thursday with big volume on the move. Friday saw a small attempt at a bounce but it wasn't very convincing. We would still consider new put positions here or if IBM bounces again look for a failed rally anywhere under $80.00. If you look at the weekly chart is looks like IBM has produced a bearish head-and-shoulders pattern. The P&F chart points to $73.00 target. Our target is the $73.50-73.00 range.

Suggested Options:
We are suggesting the July puts but bear in mind that we do not want to hold over the July earnings report.

BUY PUT JUL 80.00 IBM-SP open interest=26069 current ask $3.50
BUY PUT JUL 75.00 IBM-SO open interest=14545 current ask $1.25

Picked on June 06 at $ 78.75
Change since picked: - 1.12
Earnings Date 07/18/06 (unconfirmed)
Average Daily Volume = 5.2 million

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Schlumberger - SLB - close: 59.22 chg: -1.00 stop: 65.01

It was a very bearish week for oil stocks and oil service stocks lead the group lower. SLB broke support at its 100-dma and the $60.00 level. The recent action looks like a bear flag pattern. While SLB might be considered short-term oversold the lack of follow through on Thursday's bounce doesn't bode well. Our biggest concern right now with puts on oil stocks is that the situation with Iran might heat up and push crude oil prices higher lending support to the oil sector. Other than headline news risk (Iran) the outlook with SLB is technically pretty bearish. Readers can choose to buy puts here under $60.00 or wait for an oversold bounce back toward the $62 region or its 100-dma and enter there. Our target is the $55.75-55.50 range, above its rising 200-dma. The P&F chart shows a triple-bottom breakdown sell signal with a $49 target.

Suggested Options:
We are suggesting the July puts.

BUY PUT JUL 62.50 SLB-SZ open interest= 238 current ask $5.10
BUY PUT JUL 60.00 SLB-SL open interest=3452 current ask $3.50
BUY PUT JUL 57.50 SLB-SY open interest= 638 current ask $2.35

Picked on June 07 at $ 60.51
Change since picked: - 1.29
Earnings Date 07/21/06 (unconfirmed)
Average Daily Volume = 10.0 million

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Wynn Resorts - WYNN - close: 69.26 chg: -0.12 stop: 73.51

If you study the charts on WYNN the stock has spent the couple of days consolidating sideways. However, you'll notice a consistent trend of lower highs (trendline of resistance). If the major market averages continue lower next week then we would expect WYNN to make a run for the $65 region. Friday's failed rally near its 10-dma and back under the $70.00 level and its 100-dma looks like another entry point to buy puts. More conservative traders may want to think about reducing their risk with a stop closer to $72.00. We are suggesting two targets. Consider selling half your position in the $65.25-65.00 range and then sell the rest of your position in the $61.00-60.00 range. The simple 200-dma near $60 could be support. The P&F chart is bearish and points to a $60 target.

Suggested Options:
We are suggesting the July puts.

BUY PUT JUL 70.00 UWY-SN open interest= 180 current ask $4.20
BUY PUT JUL 65.00 UWY-SM open interest= 417 current ask $2.05

Picked on June 05 at $ 69.11
Change since picked: + 0.15
Earnings Date 08/02/06 (unconfirmed)
Average Daily Volume = 1.2 million
 

Strangle Updates

None
 

Dropped Calls

Apple Computer - AAPL - close: 59.24 chg: -1.52 stop: 58.69

We are suggesting that readers, if you opened positions on Friday, consider cutting your losses right here. Many of the world indices bounced on Friday but the lack of a bounce and follow through on Thursday's rebound in the U.S. markets looks very bearish! The attempt at a bounce in AAPL failed at its exponential 200-dma near $61.50. This was a potential obstacle we pointed out in the play description. The close back under $60.00 is another sign of weakness. We're closing the play early. More aggressive traders, if you still believe that AAPL can bounce from here may want to put their stop loss under Thursday's low (57.15). We will keep an eye on AAPL for a move past the $62.00 region as a potential bullish development.

Picked on June 08 at $ 60.76
Change since picked: - 1.52
Earnings Date 07/19/06 (unconfirmed)
Average Daily Volume = 32.1 million
 

Dropped Puts

None
 

Dropped Strangles

None
 

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