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Call Updates

Bear Stearns - BSC - cls: 139.23 chg: -3.15 stop: 134.95

Ouch! The profit taking in the broker-dealer sector was relatively heavy on Friday. The XBD index lost almost 2%. Shares of BSC fell 2.2% and took a big chunk out of our potential gains. We are not suggesting new bullish positions at this time. The close back under the $140.00 level is bearish. The best-case scenario here would be to see a bounce from its rising 10-dma near 138.50. However, if the markets continue to sink then BSC might hit $136.50 or $135.00. If you don't want to endure that kind of pull back consider exiting early right now! Our target is the $144.50-147.50 range. The P&F chart is still bullish with a $184 target.

Suggested Options:
We are not suggesting new call positions in BSC at this time.

Picked on June 29 at $137.51
Change since picked: + 1.72
Earnings Date 09/14/06 (unconfirmed)
Average Daily Volume = 1.5 million

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Fortune Brands - FO - close: 71.63 change: +0.33 stop: 69.74

We are electing to keep FO as a bullish candidate. On Thursday night we added FO to the play list but said that if the market did not respond well to the jobs report on Friday we would suggest that readers do not open new call positions. Surprisingly FO displayed some relative strength. Currently our market bias is flat to down so odds are good that FO will dip next week. We're going to continue to suggest bullish plays here but our preferred entry point would be on a dip into the $70.00-71.00 region. The simple 10-dma should offer some support near the $70.00 mark. We're going to set a short-term target at the $74.00 mark. We do not want to hold over the July earnings report (21st - unconfirmed). FYI: more aggressive traders may want to use a wider stop like under Wednesday's low.

Suggested Options:
Aggressive traders might want to consider trading the July calls. We're going to suggest the August strikes. Remember, we're not suggesting you buy both strikes. You pick the strike price that works best with your risk profile.

BUY CALL AUG 70.00 FO-HN open interest=116 current ask $3.10
BUY CALL AUG 75.00 FO-HO open interest=115 current ask $0.80

Picked on July 06 at $ 71.30
Change since picked: + 0.33
Earnings Date 07/21/06 (unconfirmed)
Average Daily Volume = 674 thousand

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Google - GOOG - close: 420.45 chg: - 2.74 stop: 399.00

What happened to GOOG on Friday afternoon? Shares were trading higher on Friday hitting $427.89 and then suddenly the stock plummeted more than ten points. Traders bought the dip around $416, which was near Wednesday's low. We didn't see any specific news to account for the weakness. At this time we remain optimistic but with a market bias that is flat to down GOOG could become a target for profit taking. More conservative types might want to lock in some profits right now. There is potential resistance in the $425-430 region with its trendline of lower highs. We are aiming for the $440 level.

Suggested Options:
We are not suggesting new call positions in GOOG at this time. Remember, we do not want to hold over the earnings report.

Picked on June 21 at $401.00
Change since picked: +19.45
Earnings Date 07/20/06 (confirmed)
Average Daily Volume = 9.8 million

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Komag Inc. - KOMG - close: 46.83 change: -0.71 stop: 44.49

KOMG weathered Friday's market weakness pretty well, especially considering the nearly 2% decline in the DDX disk drive index. We would strongly hesitate to open new call positions now that the major market indices and the DDX all look vulnerable to more selling pressure. Currently we would expect KOMG to dip toward the $45.00 level and its 10-dma. A bounce from either could be used as a new entry point. We do expect some resistance near the $50.00 level but our target is the $52.25-54.00 range. We do not want to hold over the late July earnings report.

Suggested Options:
We are not suggesting new plays here but if you do buy a bounce we'd prefer the August calls.

BUY CALL AUG 45.00 QKX-HI open interest= 669 current ask $4.40
BUY CALL AUG 50.00 QKX-HJ open interest=1009 current ask $2.10

Picked on July 06 at $ 47.54
Change since picked: - 0.71
Earnings Date 07/26/06 (unconfirmed)
Average Daily Volume = 1.1 million

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Union Pacific - UNP - close: 90.12 chg: -0.71 stop: 88.49 *new*

Traders need to be defensive here. The major indices are slipping and the transports are pulling back from resistance. More conservative traders might just want to cut their losses right here in UNP. We're keeping the stock for a couple of reasons. UNP has managed to hold on to the $90 level and both UNP and the Dow transports are still in their short-term bullish channels. We are going to raise our stop loss to $88.49. If you're not willing to exit yet but want to lower your risk you could try putting your stop under Friday's low (89.49). The P&F chart is still bullish. At this time we're not suggesting new call option plays.

Suggested Options:
We are not suggesting new call plays in UNP. Don't forget that we do not want to hold over the July earnings report.

Picked on June 29 at $ 91.54
Change since picked: - 1.42
Earnings Date 07/20/06 (unconfirmed)
Average Daily Volume = 1.6 million
 

Put Updates

Apple Computer - AAPL - close: 55.40 chg: -0.37 stop: 60.05

AAPL sank to a new eight-month low on Friday and while volume has been rising all week it failed to reach the daily average. The MACD on AAPL's daily chart is nearing a new sell signal. The P&F chart remains bearish with a $44 target. We are targeting a decline into the $50.50-50.00 range. We would consider new put options here or readers can watch for a failed rally under $58.00 as a new entry point.

Suggested Options:
We're suggesting the August puts. You pick which strike works best for you.

BUY PUT AUG 57.50 QAA-TY open interest=3070 current ask $4.40
BUY PUT AUG 55.00 QAA-TK open interest=6713 current ask $3.10
BUY PUT AUG 52.50 QAA-TX open interest=2965 current ask $2.05
BUY PUT AUG 50.00 QAA-TJ open interest=6880 current ask $1.30

Picked on June 28 at $ 56.85
Change since picked: - 1.45
Earnings Date 07/19/06 (unconfirmed)
Average Daily Volume = 33.1 million

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Digital River - DRIV - cls: 40.12 change: -1.14 stop: 42.05

Market reaction to the jobs report on Friday helped pull DRIV to a 2.7% decline but volume continues to come in very low, which tends to indicate a lack of conviction. We would wait for a move under $39.50 before considering new put positions on DRIV. Technicals on the weekly chart remain bearish and the short-term daily technical indicators are rolling over. Plus, the P&F chart is still bearish with a $26 target. We're aiming for a drop into the $35.25-35.00 range, which is under the simple 200-dma. We do not want to hold over the late July earnings report.

Suggested Options:
We're not suggesting new plays in DRIV at the moment but if shares continue to drop we'd consider the August $40 puts.

Picked on June 19 at $ 39.45
Change since picked: + 0.67
Earnings Date 07/27/06 (confirmed)
Average Daily Volume = 1.0 million

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Intl. Bus. Mach. - IBM - cls: 76.42 chg: -1.67 stop: 78.75

The market sell-off and the DJIA's triple-digit loss helped push IBM to a 2.1% decline. Volume on Friday's drop came in above average, which is good news for the bears. Right now IBM is expected to report earnings in the July 18th-20th range. We do not want to hold over the report and that doesn't give us a lot of time so we're not suggesting new plays right now. Currently our target is the $73.50 level. More aggressive traders might want to aim lower in the $72-70 region.

Suggested Options:
We are not suggesting new put plays in IBM at this time.

Picked on June 06 at $ 78.75
Change since picked: - 2.33
Earnings Date 07/18/06 (unconfirmed)
Average Daily Volume = 5.2 million

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IDEXX Labs - IDXX - close: 74.70 chg: -0.27 stop: 77.51 *new*

Volume came in very low for IDXX on Friday and shares spent the session consolidating sideways. Our market bias is flat to down so traders might want to open new put plays with IDXX under $75.00 but you'd probably need to adjust your target toward the $71-70 region. Our conservative target at $75.25 has already been hit and we're now aiming for the $72.00 level. Currently the Point & Figure chart points to a $64 target. We're going to lower our stop loss to $77.51, which is above technical resistance at the 50-dma. More conservative traders might want to adjust their stops toward last week's high near $76.50.

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

Picked on June 12 at $ 77.95
Change since picked: - 3.25
Earnings Date 07/28/06 (unconfirmed)
Average Daily Volume = 144 thousand
 

Strangle Updates

None
 

Dropped Calls

Armor Holdings - AH - close: 53.90 chg: -1.07 stop: 52.99

We are suggesting an early exit in AH. The markets did not respond well to the jobs report on Friday and we have ongoing geo-political worries with N. Korea and Iran that could rattle the markets further. Looking at AH the intraday failed rally on Thursday was a (failed) test of AH's 38.2% Fibonacci retracement level of its spring-summer decline. While there is a chance that AH could bounce from its simple 10-dma (near 53.70) we're going to exit. We would keep an eye on the stock to see if it bounces near $52.

Picked on July 02 at $ 54.83
Change since picked: - 0.93
Earnings Date 07/20/06 (unconfirmed)
Average Daily Volume = 656 thousand

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Allegheny Tech. - ATI - cls: 66.80 chg: -1.88 stop: 64.95

We are suggesting an early exit on ATI as well. The breakout over $67.50 and the $70.00 level has failed. The high on June 30th was a perfect failed rally near the 50% retracement of ATI's May-June decline. Traders bought the dip on July 5th but it looks like bears are back in control with Friday's breakdown below the 10-dma and 50-dma. The MACD on the daily chart is nearing a new sell signal. If you want to tough it out there is still potential support at the $65.00 level and ATI could bounce there. We're choosing to cut our losses here.

Picked on June 29 at $ 70.01
Change since picked: - 3.21
Earnings Date 07/26/06 (unconfirmed)
Average Daily Volume = 3.8 million

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Burlington N.Santa Fe - BNI - cls: 75.71 chg: -0.65 stop: 74.90

We have been stopped out of BNI at $74.90. Shares dipped to $74.56 on Friday morning. Volume came in above average on the session and the MACD indicator on the daily chart is nearing a new sell signal. We're going to keep an eye on BNI for future plays. The stock should have support near its 200-dma. We'd also watch the Dow Jones Transportation index, which might be forming a double-top pattern under the 5000 level.

Picked on June 29 at $ 79.09
Change since picked: - 3.38
Earnings Date 07/25/06 (confirmed)
Average Daily Volume = 2.3 million

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Chipolte Mex Grill - CMG - cls: 56.00 chg: -3.06 stop: 57.99

We have been stopped out of CMG at $57.99. After the jobs report the reaction in CMG shouldn't be a surprise. We've been growing more cautious and defensive on the stock for days now and have been warning readers that the situation was turning worse. We would expect a bounce near $55.00 and its 100-dma and nimble traders can watch to see if that bounce fails under $60 again as a potential entry point to buy puts.

Picked on June 18 at $ 61.76
Change since picked: - 5.76
Earnings Date 07/20/06 (unconfirmed)
Average Daily Volume = 384 thousand

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Goldman Sachs - GS - close: 148.51 chg: -2.07 stop: 146.45

Our play with GS never opened! We are dropping GS as a potential bullish call candidate. It has been our plan to buy calls if GS could trade at $153.05 or higher. Thus far the stock has been unable to breakout past the $153.00 level and remains hampered by the 50-dma. We will keep an eye on the stock for new entry points. A bounce from $145 might be tempting.

Picked on June xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 09/12/06 (unconfirmed)
Average Daily Volume = 5.0 million

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MicroStrategy - MSTR - cls: 87.27 change: -6.34 stop: 91.74

The GSO software index has traded lower three days in a row. Leading the plunge in the sector has been MSTR. After the failed rally under $100 on Wednesday, July 5th we warned readers to look for a dip toward $95. The stock slid further with a drop under $94 on Thursday. We didn't close the play since the market expectation for the jobs report on Friday was generally positive. We had been playing with a wide, aggressive stop because MSTR tends to be volatile. Now that shares have broken down under the $90.00 mark and its 200-dma it looks like a bearish put play candidate. We would have been stopped out at $91.74.

Picked on July 02 at $ 97.52
Change since picked: -10.25
Earnings Date 07/27/06 (unconfirmed)
Average Daily Volume = 333 thousand

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Wynn Resorts - WYNN - close: 70.43 chg: -1.68 stop: 69.75

We have been stopped out of WYNN at $69.75. The stock was consolidating sideways between $71.50 and $70.50 for most of the session but then a late afternoon sell-off pushed shares to $69.71. Volume came in below average on the session. A drop under $69.50 might be used as a bearish entry point to buy puts and target the $65 region.

Picked on June 29 at $ 73.64
Change since picked: - 3.21
Earnings Date 08/02/06 (unconfirmed)
Average Daily Volume = 1.0 million
 

Dropped Puts

Amgen Inc. - AMGN - close: 66.39 chg: +0.45 stop: 67.05

We have been stopped out of AMGN at $67.05. The stock displayed relative strength during the first half of Friday and broke out above technical resistance at its 50-dma on an intraday basis. The rally eventually failed and this might be a new entry point to buy puts.

Picked on June 05 at $ 67.48
Change since picked: - 1.09
Earnings Date 07/18/06 (unconfirmed)
Average Daily Volume = 8.9 million
 

Dropped Strangles

None
 

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