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Call Updates

Dominion - D - close: 78.60 change: +0.37 stop: 75.75 *new*

Once again shares of D were ignored as investors seemed to focus on the rebound in tech stocks. Shares of Dominion spent Friday's session trading sideways. We remain bullish but the stock does look a little bit short-term overbought so it would not be surprising to see a pull back toward the simple 10-dma near $77.00-77.50. If you're looking for a new entry point consider waiting for a dip near the 10-dma. We are not suggesting new plays at this time. Please note that we are adjusting the stop loss to $75.75. Our target is 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.

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

Picked on July 17 at $ 76.05
Change since picked: + 2.55
Earnings Date 08/03/06 (confirmed)
Average Daily Volume = 1.5 million

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EOG Resources - EOG - close: 72.06 chg: +1.44 stop: 69.59 *new*

Oil stocks turned in another mixed performance on Friday. Investors weren't sure whether to sell them on the pull back in crude oil to under $74 a barrel or buy them after a string of record earnings reports from the heavy-weights in the oil sector. In EOG's case traders decided to buy the dip near $70. This looks like a new bullish entry point to buy calls however we don't have any time left. We don't want to hold over EOG's earnings report and the company is due to announce on Tuesday morning. It is our plan to exit this play on Monday afternoon at the closing bell. We're raising the stop loss to $69.59, just under Friday's low.

Suggested Options:
We're not suggesting new plays in EOG at this time.

Picked on July 26 at $ 71.01
Change since picked: + 1.05
Earnings Date 08/01/06 (confirmed)
Average Daily Volume = 3.6 million

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Goldman Sachs - GS - close: 151.72 chg: +3.46 stop: 144.95 *new*

Financials rallied pretty strongly on Friday and leading the way was the XBD broker-dealer index with a 2.4% gain. Shares of GS followed with a 2.3% gain and a bullish breakout over round-number resistance at the $150.00 mark. We do note that the rally in GS stalled near its simple 100-dma on Friday afternoon but we remain bullish. We're adjusting the stop loss to $144.95. If you're looking for a new entry point consider waiting for a dip toward the $150 level. This action in the brokers looks pretty strong. The XBD broke out above its 50-dma and 200-dma on Friday. Currently we have a $154.00-155.00 target for GS. We're going to adjust our strategy a little bit here and make the $154.00 level our conservative target and set an aggressive target at $157.50. We'd suggest that readers exit a majority of their position at $154 and only keep a small play open for the $157.50 level.

Suggested Options:
We are not suggesting new call positions right here although a dip toward $150 could be used as an entry point. We like the August and September calls but August options expire in three weeks.

Picked on July 25 at $148.05
Change since picked: + 3.67
Earnings Date 09/21/06 (unconfirmed)
Average Daily Volume = 5.2 million

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The Houston Exp. - THX - cls: 63.52 chg: +0.25 stop: 59.99

The rally in THX continued on Friday although the stock's upward momentum seemed to slow a bit. The stock continues to look like an attractive bullish call candidate given the breakout from its trading range and resistance near $62.50. Yet we are not suggesting new plays at this time. THX is due to report earnings on the morning of August 3rd (Thursday). We do not want to hold over the report so we're planning to exit on Wednesday afternoon at the closing bell. Our target is the $67.50-70.00 range.

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

Picked on July 25 at $ 62.60
Change since picked: + 0.92
Earnings Date 08/03/06 (confirmed)
Average Daily Volume = 667 thousand
 

Put Updates

Apollo Group - APOL - close: 47.25 chg: +1.05 stop: 50.05

We were encouraged when APOL failed to respond to the positive earnings news and big, bullish breakout in shares of Strayer Education (STRA) on Thursday. Unfortunately, shares of APOL responded positively to the market's rally on Friday. The stock added 2.2% to rally back towards short-term technical resistance at its descending 10-dma. Thus far the stock has been unable to breakout past the 10-dma over the past few weeks but if the markets continue to rally higher next week we'd expect APOL to follow suit since shares look short-term oversold. We are not suggesting new put plays at this time. While we are going to leave our stop loss at $50.05 more conservative traders may want to adjust theirs toward the $48.50-48.25 region to reduce their risk. The 10-dma is near $47.55. Our target is the $45.50-45.00 range. The Point & Figure chart remains very bearish with a projected $36 target.

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

Picked on July 09 at $ 49.92
Change since picked: - 2.67
Earnings Date 09/19/06 (unconfirmed)
Average Daily Volume = 1.4 million

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Chicago Merc. - CME - close: 453.50 change: + 8.16 stop: n/a

Friday's market rally produced a bounce in CME. The three-week pattern still looks bearish but some of the short-term technical oscillators are suggesting that CME wants to bounce higher. We are not suggesting new bearish put positions but aggressive traders might consider a failed rally under $460 as a new entry point. The bigger picture shows CME with a bearish double-top pattern formed over the last four months. The P&F chart points to a $408 target. We are targeting a drop into the $420-400 range although at the moment we're thinking about an exit at the rising 200-dma near 420.50. This was a high-risk, speculative play and the post-earnings reaction wasn't what we expected it to be. There are only three weeks left before August options expire.

Suggested Options:
We are not suggesting new plays in CME.

Picked on July 23 at $452.00
Change since picked: + 1.50
Earnings Date 07/25/06 (confirmed)
Average Daily Volume = 680 thousand

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Itron - ITRI - close: 51.58 chg: +1.37 stop: 52.55

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

We didn't see anything negative about ITRI's latest earnings report. If anything the news was pretty positive yet investors chose to sell the news. The reaction to its earnings pushed ITRI to resistance at $56.00 Thursday morning but then the stock reversed. This is the third failed rally/bearish reversal at $56 in the last several days and the ensuing sell-off pushed shares of ITRI under technical support at the 200-dma and toward round-number support at $50. Volume was naturally way above the norm. We find it noteworthy that ITRI's Point & Figure chart shows multiple failed rallies at its descending trendline of resistance and Thursday's sell-off produced a new sell signal. We are suggesting that readers use a trigger at $49.75 to open put positions. Aggressive traders may want to jump in early around $49.95. More conservative types may want to wait for a decline under $49.50 just to make sure. Our target is the $45.10-45.00 range.

Suggested Options:
We are suggesting the August and September puts. Please note that the August options expire in about three weeks. You choose which strike and month best suits your trading style.

BUY PUT AUG 55.00 IUP-TK open interest=271 current ask $4.80
BUY PUT AUG 50.00 IUP-TJ open interest=780 current ask $1.90
BUY PUT AUG 45.00 IUP-TI open interest=198 current ask $0.60

BUY PUT SEP 55.00 IUP-UK open interest= 90 current ask $5.90
BUY PUT SEP 50.00 IUP-UJ open interest= 62 current ask $3.10

Picked on July xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 07/26/06 (confirmed)
Average Daily Volume = 424 thousand

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Manpower Inc. - MAN - close: 60.39 chg: +1.27 stop: 62.25

Once again we're faced with the prospect that MAN looks poised to bounce higher. The two-month pattern is bearish with its failed rallies, lower highs and lower lows. Yet short-term the stock looks ready to rebound toward the $62.00-62.50 region and the MACD on the daily chart is hinting at a new buy signal soon. We are not suggesting new put positions at this time. More conservative traders may want to consider tightening their stops toward $61 (last week's high) or just exit early altogether. Currently our target is the $55.50-55.00 range. We suspect that the simple 200-dma near $55.00 will offer technical support. FYI: The P&F chart points to a $48 target.

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

Picked on July 20 at $ 59.42
Change since picked: + 0.97
Earnings Date 07/19/06 (confirmed)
Average Daily Volume = 1.0 million

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Union Pacific - UNP - close: 85.22 chg: +1.45 stop: 86.26*new*

We strongly considered abandoning this play in UNP. The railroad index added 2.2% on Friday and the Dow Jones transportation index added 2.5%. While both moves look like oversold bounces in the current down trend the bounce may not be over yet. UNP is also still in its bearish trend of lower highs and lower lows. Yet short-term UNP may have put in a bottom. The stock has bounced twice from the $82 level and Friday's gain put UNP back above resistance at $85.00, its 10-dma and its 200-dma. The MACD on the daily chart is hinting at a new buy signal soon. More conservative traders should definitely consider an early exit here. We're going to lower our stop loss to $86.26. We would keep an eye on UNP's 50-dma overhead near $89. A failed rally near the 50-dma could be used as a new entry point to buy puts. Our target is the $80.10-77.65 range.

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

Picked on July 21 at $ 83.75
Change since picked: + 1.47
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: 47.83 change: +0.40 stop: n/a

BOL is still stuck in its trading range and we don't see any upcoming events that will influence a breakout at this time. We still can't find the company's next earnings announcement date. More conservative traders may want to just cut their losses right here. Our estimated cost on the strangle was $2.15. If you could sell today the options would go for about $1.55. We're keeping the play open but bear in mind that August options are due to expire in there weeks. BOL does have a bearish pattern of lower highs on its daily chart. In contrast the P&F chart is bullish and points higher so the stock really could go either way. Our goal will be to sell if either option rises to $3.25 or more. The options in our suggested strangle are the August $50 call (BOL-HJ) and the August $45 put (BOL-TI).

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

Picked on July 23 at $ 47.40
Change since picked: + 0.43
Earnings Date 00/00/06 (unconfirmed)
Average Daily Volume = 2.2 million

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L-3 Comm. - LLL - close: 74.55 chg: +0.76 stop: n/a

The market rally on Friday helped LLL produce a bounce following Thursday's earnings-produced sell-off. Unfortunately for us the reaction to earnings was not as big as expected. There are a lot of signals suggesting that LLL's next move will be down but we suspect that the stock could go either direction. Our problem now is time. We only have three weeks left before August options expire and the time premium is going to begin decaying at a much faster rate. We are not suggesting new strangle positions at this time. Our estimated cost for the strangle 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).

Suggested Options:
We're not suggesting new plays in LLL at this time.

Picked on July 23 at $ 75.26
Change since picked: - 0.71
Earnings Date 07/27/06 (confirmed)
Average Daily Volume = 1.2 million

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3M Co. - MMM - close: 70.52 change: +0.77 stop: n/a

MMM is still trying to bounce but it's anyone's guess where the stock is headed next. The P&F chart has produced a really big sell signal and currently points to a $48 target. Yet the weekly chart for MMM has produced a "hammer" style candlestick pattern, which is normally seen as a bullish reversal when produced after any type of pull back. We don't care what direction MMM goes as long as it gets there quickly. There are only three weeks left before August options expire. Due to our time crunch we're not suggesting new plays at this time. 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).

Suggested Options:
We are not suggesting new plays in MMM.

Picked on July 23 at $ 70.72
Change since picked: - 0.20
Earnings Date 07/25/06 (confirmed)
Average Daily Volume = 3.7 million

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Phelps Dodge - PD - close: 81.50 change: +3.42 stop: n/a

We're starting to see some movement in shares of PD. The stock added 4.3% on Friday and broke out past the $80 level and its simple 50-dma. The move appears to be fueled by developments in its merger with Inco. On Friday Inco announced that its bid to buy Falconbridge had failed and now the company (Inco) would focus on its merger with PD. Yet even the deal with PD is not problem free. There is also another bid to buy Inco from a Canadian mining company and some analysts believe that a bidding war could erupt over Inco and other companies may become involved. We are not suggesting new strangle plays in PD and traders should note that we only have three weeks left before August options expire. Our estimated cost for the strangle was 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).

Suggested Options:
We're not suggesting new plays in PD at this time.

Picked on July 23 at $ 77.20
Change since picked: + 4.30
Earnings Date 07/26/06 (confirmed)
Average Daily Volume = 7.8 million
 

Dropped Calls

General Dynamics - GD - cls: 67.26 chg: -0.86 stop: 67.45

The rally in the defense stocks has stalled and shares of GD look poised to breakdown from its two-month bullish up trend. A drop under $66 or its 50-dma might be used as a bearish entry point. Another decline would suggest that the action over the last few months has produced a big, bearish double-top pattern. It was our plan to buy calls on a breakout over resistance at $70.00. Our trigger to open plays was at $70.05 but GD never hit our trigger so we're dropping it as a candidate.

Picked on July xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 07/19/06 (confirmed)
Average Daily Volume = 1.5 million
 

Dropped Puts

None
 

Dropped Strangles

None
 

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