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Call Updates

Dominion - D - close: 78.05 change: +0.58 stop: 74.99

A positive follow through on yesterday's big market bounce helped lift shares of D to a new relative high over minor resistance at the $78.00 level. The stock also produced a bullish engulfing candlestick pattern. We remain bullish and continued to target the $81.00-82.00 range. although more conservative types may want to exit near $80.00. Please note that we do not want to hold over D's early August earnings report, which gives us about eight trading days.

Picked on July 17 at $ 76.05
Change since picked: + 2.00
Earnings Date 08/03/06 (confirmed)
Average Daily Volume = 1.5 million

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Goldman Sachs - GS - close: 148.49 chg: +1.59 stop: 141.79

Our new bullish play on GS is now open. The stock broke out past its simple 50-dma and minor resistance at the $148.00 level. Our trigger to buy calls was at $148.05. The move today helped produce a new MACD buy signal on the daily chart. Our target is the $154.00-155.00 range. We do note that the stock stalled at the $150 level this afternoon. Yesterday we suggested that more conservative traders wait for a move over $150 before considering new positions. More conservative traders may also want to play with a tighter stop loss. Our stop is at $141.79. Conservative types may want to put their stop closer to $145.

Picked on July 25 at $148.05
Change since picked: + 0.44
Earnings Date 09/21/06 (unconfirmed)
Average Daily Volume = 5.2 million

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The Houston Exp. - THX - cls: 62.60 chg: +0.73 stop: 59.99

Oil stocks continued to rally on Tuesday in spite of a pull back in crude oil. The OIX oil index added 0.9% and the OSX oil services index added 3.3%. Shares of THX rose 1.17% and broke out past resistance at the $62.50 level. Our trigger to buy calls was at $62.60, which has been hit, so the play is now open. Our target is the $67.50-70.00 range. We do not want to hold over the early August earnings report. FYI: The Point & Figure chart is bullish and points to a $76 target. Plus, tomorrow will bring the weekly oil inventory numbers and these could produce some movement in the sector.

Picked on July 25 at $ 62.60
Change since picked: + 0.00
Earnings Date 08/03/06 (unconfirmed)
Average Daily Volume = 667 thousand
 

Put Updates

Apollo Group - APOL - close: 47.59 chg: -0.15 stop: 50.05

APOL displayed relative weakness today. The stock failed to participate in the market's follow through rally. The stock remains in its bearish trend of lower highs but we're not suggesting new plays at this time. Our target is the $45.50-45.00 range.

Picked on July 09 at $ 49.92
Change since picked: - 2.33
Earnings Date 09/19/06 (unconfirmed)
Average Daily Volume = 1.4 million

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Chicago Merc. - CME - close: 455.25 change: - 9.75 stop: n/a

Hmmm.... our speculative earnings sell-off play in CME is not panning out how we expected it might but that doesn't mean it's "game over" just yet. The company reported earnings this morning and beat analysts' estimates by 3 cents per share. Yet the stock appeared to gap open lower this morning around $456 (see the intraday chart). There was a bounce and another afternoon rally attempt but both stalled under the $460 region. Concerning investors were revenues and margins. The company's revenues came in under analysts' expectations and profit margins shrank on some of their most heavily traded products. We are not suggesting new plays at this time but more aggressive traders might want to consider buying puts if CME falls under today's low near $446. Currently we're aiming for a decline into the $420-400 range.

Editor's note: For all of our relatively newer readers we want to remind you that we almost never hold an option position over an earnings report. There are too many unknown variables that could move the stock against you. The company could hit Wall Street's estimates but miss the revenue number. Or they could issue an earnings warning or guide higher. There are a number of potential stock movers that could push shares violently either direction. For example: Yesterday (Monday) we closed put plays in ACL and JEC to avoid holding over their earnings report. Today, after reporting earnings, shares of ACL and JEC are up 13.6% and 9.1%, respectively. The exception to this rule is a strangle play when normally we want to hold over the earnings report because we're counting on the extreme volatility the reports can generate. As far as this put play with CME we were very specific that it was pure speculation and if the stock didn't sell-off then odds were it would be a 100% loss.

Picked on July 23 at $452.00
Change since picked: + 3.25
Earnings Date 07/25/06 (confirmed)
Average Daily Volume = 680 thousand

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IDEXX Labs - IDXX - close: 75.21 chg: +0.90 stop: 76.05

IDXX is still bouncing and the stock is eroding our potential gains. We've been suggesting for days now that traders exit early and lock in a profit. The only reason we are not closing the play is that IDXX remains under resistance at its 50-dma and 200-dma in the $75.50-76.00 region and the stock could still reverse lower although that likelihood is shrinking. Our conservative target at $75.25 has already been hit and we're currently aiming for $72.50. We do not want to hold over the earnings report on Friday, July 28th.

Picked on June 12 at $ 77.95
Change since picked: - 2.74
Earnings Date 07/28/06 (confirmed)
Average Daily Volume = 144 thousand

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Manpower Inc. - MAN - close: 60.99 chg: +0.73 stop: 62.25

MAN spent most of the session trading sideways until a late day rally in the last hour of trading. The close over MAN's 10-dma is bullish and bad news for our put play. Conservative traders may want to cut their losses right here. We are not suggesting new positions.

Picked on July 20 at $ 59.42
Change since picked: + 1.57
Earnings Date 07/19/06 (confirmed)
Average Daily Volume = 1.0 million

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Union Pacific - UNP - close: 84.24 chg: -1.18 stop: 87.01

It would have been a rough day for UNP had it not been for the last hour rally. The transports were hit hard by weakness in UPS, which tumbled more than 10% after a disappointing earnings report. The railroad index also closed lower after BNI reported earnings that came in better than expected and issued strong comments about demand but investors still chose to sell the news. We find the initial weakness in UNP this morning very telling since the company received an analyst upgrade to a "buy" but the news failed to stop any selling pressure. This is a tough spot to consider new plays. The wider market is bouncing higher but the railroads are showing weakness. We'd probably hesitate to open new put plays in UNP at the moment.

Picked on July 21 at $ 83.75
Change since picked: + 0.49
Earnings Date 07/20/06 (confirmed)
Average Daily Volume = 1.7 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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Bausch Lomb - BOL - close: 47.91 change: +0.44 stop: n/a

Shares of BOL are still trading inside our suggested entry range (47.00-48.00) to open strangle positions. Tomorrow is our last day to open positions ahead of BOL's earnings report expected on July 27th before the market's open. Our estimated cost was $2.15. Our goal will be to sell if either option rises to $3.25 or more. More aggressive traders may want to aim higher. The options in our suggested strangle are the August $50 call (BOL-HJ) and the August $45 put (BOL-TI).

Picked on July 23 at $ 47.40
Change since picked: + 0.51
Earnings Date 07/27/06 (unconfirmed)
Average Daily Volume = 2.2 million

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L-3 Comm. - LLL - close: 76.78 chg: +0.54 stop: n/a

LLL added another 0.7% following yesterday's breakout over the 50-dma. The stock is currently outside our suggested entry range (74.00-76.00) to open positions. If LLL does pull back tomorrow traders could still try and open strangles but we'd want to try and get as close to the $75 level as possible. Tomorrow is our last day to open any positions ahead of the company's earnings report expected on Thursday. Our estimated cost was $1.35. We will plan to sell if either option rises to $2.25 or more. The options in our LLL strangle are the August $80 call (LLL-HP) and the August $70 put (LLL-TN).

Picked on July 23 at $ 75.26
Change since picked: + 1.52
Earnings Date 07/27/06 (confirmed)
Average Daily Volume = 1.2 million

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3M Co. - MMM - close: 68.11 change: -3.58 stop: n/a

MMM reported earnings this morning. The company missed estimates by 2 cents and issued an earnings warning for the third quarter. The market reaction was naturally negative with the stock plunging through significant support at the $70.00 level. While MMM might see an oversold bounce broken support at $70 should now act as new resistance. We are not suggesting new strangle plays. Our estimated cost was $0.75. We are planning to exit if either options rises to $1.50 or more. The options in our strangle are the August 65 put (MMM-TM) and the August 75 call (MMM-HO).

Picked on July 23 at $ 70.72
Change since picked: - 2.61
Earnings Date 07/25/06 (confirmed)
Average Daily Volume = 3.7 million

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Phelps Dodge - PD - close: 79.43 change: +2.75 stop: n/a

PD produced a big bounce today. The stock added 3.5% on below average volume to close right under round-number resistance at the $80 level. The company did receive some good news today. Canada's antitrust agency gave PD the okay to continue with its Inco acquisition. Shares of PD are currently outside of our suggested entry range (76-78) to buy a strangle and since earnings are expected tomorrow morning we're not suggesting new strangle positions. Analysts are looking for PD to report earnings of $4.01 a share. Our estimated cost is at $2.15. We're planning to sell if either option rises to $3.15 or more. The options in our strangle are the August $85 call (DPB-HQ) and the August $70 put (PT-TN).

Picked on July 23 at $ 77.20
Change since picked: + 2.23
Earnings Date 07/26/06 (confirmed)
Average Daily Volume = 7.8 million
 

Dropped Calls

CORRECTION: In the Monday night newsletter we mistakenly listed Alcon (ACL) as a "closed call" when it was actually a "closed put" play.
 

Dropped Puts

Air Products Chem. - APD - cls: 61.81 chg: +0.18 stop: 64.01

It was our plan to exit on Tuesday at the closing bell to avoid holding over tomorrow's earnings report from APD. The stock tried to rally but was struggling with technical resistance at its 10-dma and 200-dma near $62. Wall Street is looking for APD to report earnings of $0.91 per share tomorrow morning.

Picked on July 09 at $ 62.95
Change since picked: - 1.14
Earnings Date 07/26/06 (confirmed)
Average Daily Volume = 1.2 million

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Oil Serv. Holders - OIH - cls: 139.46 chg: +5.36 stop: 134.26

The oil stocks are rebounding and leading the way are the oil service stocks. The OSX index added 3.3%. The OIH out performed with a 3.99% gain right back toward the 200-dma and the $140 region. It was our plan to buy a breakdown under support and the neckline to its head-and-shoulders pattern at $130. Our trigger to buy puts was at $129.00. However, OIH never hit our trigger so we're dropping the HOLDR as a bearish candidate.

Picked on July xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 00/00/00 (unconfirmed)
Average Daily Volume = 11.6 million
 

Dropped Strangles

None
 

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