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Call Updates

Bear Stearns - BSC - cls: 138.36 chg: -1.14 stop: 134.95

BSC under performed the markets and its peers today but Tuesday's session may have produced a short-term bottom. The XBD broker-dealer index rebounded from a test of its simple 200-dma. Shares of BSC rallied from its lows near $136.25. If you look at an intraday chart of BSC the stock actually broke out past its three-day pattern of lower highs. Aggressive traders might want to consider buying calls on a move over $139.00. We would play it more cautiously and wait for a rally over the $140.00 or $140.50 levels before initiating plays. Our target is the $144.50-147.50 range. The P&F chart is still bullish with a $184 target.

Picked on June 29 at $137.51
Change since picked: + 0.85
Earnings Date 09/14/06 (unconfirmed)
Average Daily Volume = 1.5 million

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Fortune Brands - FO - close: 72.47 change: +0.10 stop: 69.74

It was a relatively quiet day for FO. The stock traded in a narrow 70-cent range. If you're optimistic then it might be worth noting that FO began to bounce from its dip today a lot earlier than the rest of the market. We don't see any real changes from our previous updates. Our target is the $74.00 level. We're concerned the 50-dma may be overhead resistance. We do not want to hold over the July earnings report (21st - unconfirmed).

Picked on July 06 at $ 71.30
Change since picked: + 1.17
Earnings Date 07/21/06 (unconfirmed)
Average Daily Volume = 674 thousand

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Google - GOOG - close: 424.56 chg: + 6.36 stop: 399.00

GOOG experienced some weakness this morning with a dip to $413.00 but bulls rushed in and pushed the stock to a 1.5% gain. The stock actually looks poised to challenge the $430 level soon. We are not suggesting new plays at this time. More conservative traders might want to do some profit taking here, especially since GOOG might have some resistance in the $425-430 range given its trendline of lower highs (see the January 2006 and April 2006 peaks). Another alternative for conservative traders would be to tighten their stops. Just under the $410 level looks like a good place for a stop loss. We are leaving our target at $440 and our stop at $399 for now.

Picked on June 21 at $401.00
Change since picked: +23.56
Earnings Date 07/20/06 (confirmed)
Average Daily Volume = 9.8 million

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Komag Inc. - KOMG - close: 45.74 change: +0.41 stop: 44.49

We remain cautious with KOMG. Some of the technology sectors witnessed a decent rebound today, thanks in part to some positive comments from KLAC. The DDX disk drive index produced a strong 1.88% bounce today. That's probably what saved shares of KOMG. KOMG bounced from the $44.66 level to post a 0.9% gain. This could be used as a new entry point but we're skeptical of today's strength so readers might want to wait for a mover $46.00 before considering new call positions. Our target is the $52.25-54.00 range.

Picked on July 06 at $ 47.54
Change since picked: - 1.80
Earnings Date 07/26/06 (unconfirmed)
Average Daily Volume = 1.1 million

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Union Pacific - UNP - close: 90.23 chg: -0.13 stop: 88.49

Rival train stocks like BNI and CSX closed higher today, which helped contribute to the Dow Jones transportation index's rebound from its lows. Unfortunately, UNP spent the day consolidating sideways and failed to post a gain. We don't see any real changes from our previous updates. Our readers might want to wait for a move over $91.00 before considering new plays. Currently our target is the $96.00-97.00 range.

Picked on June 29 at $ 91.54
Change since picked: - 1.31
Earnings Date 07/20/06 (unconfirmed)
Average Daily Volume = 1.6 million
 

Put Updates

Apple Computer - AAPL - close: 55.65 chg: +0.65 stop: 58.55

AAPL had a couple of mixed headlines today. One news story was about a top executive in Japan resigning. Also hitting the wires was new analyst coverage of the stock with a "strong buy". Yet shares of AAPL failed to react to either story and the stock only began to rise late in the afternoon with the rest of the market. We are not suggesting new plays at this time. The P&F chart remains bearish with a $44 target. We are targeting a decline into the $50.50-50.00 range.

Picked on June 28 at $ 56.85
Change since picked: - 1.24
Earnings Date 07/19/06 (unconfirmed)
Average Daily Volume = 33.1 million

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Air Products Chem. - APD - close: 64.91 chg: +1.62 stop: 65.01

Hmmm... something happened this morning or last night that helped launch APD higher at the open. Unfortunately, we cannot seem to find any specific news to account for the morning strength. Then the afternoon market rally began and APD continued to rise. This does not bode well for the bears or our puts. The stock closed above potential technical resistance at its 50-dma. Odds are that we will be stopped out tomorrow at $65.01 but it's worth noting that in after hours trading tonight APD was trading lower, near $64.25.

Picked on July 09 at $ 62.95
Change since picked: + 1.96
Earnings Date 07/26/06 (unconfirmed)
Average Daily Volume = 1.2 million

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Apollo Group - APOL - close: 50.16 chg: +0.04 stop: 52.51

APOL experienced some volatility today. This morning the company stated that they will delay filing their 10-Q form and the company also revealed that it is the target of an "informal" SEC investigation. Market reaction had APOL gapping lower to open at $47.99 only to bounce back toward the $50.00 level. We remain bearish, especially given this new news, but the rebound makes us cautious. It might pay off to wait for a new decline under $49.50 before considering new put positions. Our target is the $45.50-45.00 range.

Picked on July 09 at $ 49.92
Change since picked: + 0.24
Earnings Date 09/19/06 (unconfirmed)
Average Daily Volume = 1.4 million

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Intl. Bus. Mach. - IBM - cls: 76.47 chg: -0.20 stop: 78.75

Hardware stocks continued to be weak this morning but traders bought the dip, especially after the positive earnings comments surfaced from semiconductor company KLAC. IBM hit a new relative low but the afternoon rebound has produced a short-term bullish reversal pattern. We are not suggesting new put plays and would expect a bounce probably back toward the $78.00 region. Currently our target is the $73.50 level. More aggressive traders might want to aim lower in the $72-70 region.

Picked on June 06 at $ 78.75
Change since picked: - 2.20
Earnings Date 07/18/06 (unconfirmed)
Average Daily Volume = 5.2 million

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IDEXX Labs - IDXX - close: 73.87 chg: +0.02 stop: 77.01 *new*

It was a very quiet day for IDXX. The stock traded sideways in a 38-cent range. We do not see any changes from our previous updates but we are going to inch our stop loss down to $77.01. More conservative traders may want to think about locking in some profits here. 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.

Picked on June 12 at $ 77.95
Change since picked: - 4.12
Earnings Date 07/28/06 (unconfirmed)
Average Daily Volume = 144 thousand
 

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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D.R.Horton - DHI - close: 23.01 change: -0.49 stop: n/a

The charts between the DJUSHB home construction index and DHI look almost identical; except today the DJUSHB lost 1.5% and shares of DHI lost just over 2%. It looks like DHI is poised to breakdown lower from its recent sideways consolidation. Please note that the stock is outside of our suggested entry range to open strangle plays. Our estimated cost was about $1.70. Right now we're planning to exit if either option rises to $2.55 or more. The options in our strangle are the August $25 call (DHI-HE) and the August $22.50 put (DHI-TX).

Picked on July 09 at $ 23.90
Change since picked: - 0.89
Earnings Date 07/20/06 (confirmed)
Average Daily Volume = 3.7 million

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KB Home - KBH - close: 44.00 change: -1.12 stop: n/a

KBH is also breaking down with a 2.48% loss today. We suspect that shares might try and fill the gap from Tuesday morning so if you are looking for a new entry point wait for a bounce to the $45.00 region. Our estimated cost was about $1.45. The options we suggested were the August $50 call (KBH-HJ) and the August $40 put (KBH-TH). We would like to exit if either option rises to $2.45 or more.

Picked on July 09 at $ 45.76
Change since picked: - 1.76
Earnings Date 09/14/06 (unconfirmed)
Average Daily Volume = 2.4 million
 

Dropped Calls

None
 

Dropped Puts

Digital River - DRIV - cls: 40.85 change: +0.71 stop: 42.05

We're throwing in the towel on DRIV. The stock experienced a little bit of weakness this morning but quickly rebounded. Shares look poised to retest resistance near the $42.00 level. Given the market's bounce today we don't want to risk holding puts on DRIV at this time. More aggressive traders might want to stick it out.

Picked on June 19 at $ 39.45
Change since picked: + 1.40
Earnings Date 07/27/06 (confirmed)
Average Daily Volume = 1.0 million
 

Dropped Strangles

None
 

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