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Call Updates

Cerner Corp. - CERN - close: 48.21 chg: +0.55 stop: 46.45

Tech stocks out performed the broader market on Monday. Shares of CERN managed to out do both the NASDAQ Composite and the NWX networking index. Today's breakout over resistance at $48.00 is also a bullish breakout through the top of its two-month trading range. The target on the P&F chart has risen from $76 to $79. We have been suggesting a trigger to buy calls at $48.05 so the play is now open. Our target is the $52.00-52.50 range. The $50.00 mark might offer some round-number resistance so expect a pull back on the initial test of $50.

Picked on October 30 at $ 48.05
Change since picked: + 0.16
Earnings Date 10/19/06 (confirmed)
Average Daily Volume = 662 thousand

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Frontier Oil - FTO - close: 29.40 change: -0.45 stop: 27.99

The situation with FTO is not looking very good. Shares spent most of last week failing to breakout past the $30.50 level. Today the stock lost 1.5% thanks to a sharp decline in crude oil futures. The weakness today did stall at its 50-dma but it could be temporary. The technical indicators are starting to turn bearish. Over the weekend we suggested that more conservative traders may want to exit early. If you don't want to exit early then consider tightening your stop loss toward $28.50 or under today's low near $29.00. We're not suggesting new positions and if FTO closes under $29.00 we will probably exit early anyway! Our short-term target is the $32.50-33.00 range. It's short-term because we want to exit ahead of FTO's November 7th earnings report.

Picked on October 15 at $ 28.90
Change since picked: + 0.50
Earnings Date 11/07/06 (confirmed)
Average Daily Volume = 3.2 million

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NTL Inc. - NTLI - close: 27.07 chg: -0.16 stop: 25.99

NTLI spiked to a new relative high at $28.48 this morning but the strength was fleeting and shares spent most of the session consolidating sideways near the $27 level. Today's session looks like a failed rally and traders should turn more cautious here. Our target is the $29.90-30.00 range. We do not want to hold over the early November (8th?) earnings report.

Picked on October 26 at $ 27.41
Change since picked: - 0.34
Earnings Date 11/08/06 (unconfirmed)
Average Daily Volume = 2.4 million

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Vimpel Comm. - VIP - close: 64.97 chg: -0.10 stop: 61.90

We cautioned readers over the weekend to look for a dip toward the 10-dma or the $64.00 level. Share of VIP dipped to $63.80 this morning before traders bought the dip. The bounce today looks like a new entry point but if you're opening new positions here you may want to use a tighter stop loss. Our target is the $67.50-70.00 range. We plan to exit ahead of the mid-November earnings report. FYI: We are seeing a bearish divergence between the price action and the RSI on VIP's daily chart.

Picked on October 12 at $ 62.17
Change since picked: + 2.80
Earnings Date 11/17/06 (unconfirmed)
Average Daily Volume = 1.0 million
 

Put Updates

Alcon Inc. - ACL - close: 106.87 chg: -0.47 stop: 110.41

ACL continues to sink lower although the pace of the decline is slowing. The stock is nearing potential support near the October low. We are suggesting a trigger to open plays at $105.75, which is under the October 24th low. If triggered our target is the $100.10-100.00 level. We would consider this play slightly more aggressive due to the wide stop loss we're suggesting. Keep an eye on the DRG drug index. The DRG spent about six days failing to breakout past the 363 level and now the sector index is falling sharply. Short-term technicals have turned negative for the group but the overall bullish up trend is still intact (for now).

Picked on October xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 10/23/06 (confirmed)
Average Daily Volume = 520 thousand

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Advanced Micro Dev. - AMD - cls: 21.32 chg: +0.46 stop: 22.05

An upgrade for KLAC sparked a rebound in the semiconductor sector. The SOX added 1.1% while shares of AMD out performed its peers with a 2.2% bounce. Yet in spite of today's strength in AMD the stock failed to breakout past its descending 10-dma. Traders could use a new decline under $21.00 as a new entry point to buy puts. More conservative traders may want to wait for a decline under round-number support at $20.00 before initiating positions. We're still expecting some market weakness in early November since tomorrow is year-end for many mutual funds. Our target is the $17.50-17.00 range.

Picked on October 29 at $ 20.86
Change since picked: + 0.46
Earnings Date 10/18/06 (confirmed)
Average Daily Volume = 23.0 million

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Amazon.com - AMZN - close: 38.15 chg: -0.09 stop: 40.25

The rally in AMZN has paused. The stock has traded sideways in the $37.50-38.50 range for the last three sessions. We suspect that AMZN will fill the gap from last week and we're suggesting an aggressive put play to capture that move. The $39.00 level is resistance but we're giving AMZN room to maneuver with a stop loss above round-number resistance at $40.00. More patient traders may want to try and time an entry on another failed rally near $39 or if the rally continues then near $40. Our target is the $35.00-34.00 range.

Picked on October 29 at $ 38.24
Change since picked: - 0.09
Earnings Date 10/24/06 (confirmed)
Average Daily Volume = 7.9 million

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PACCAR Inc. - PCAR - cls: 59.50 chg: +0.08 stop: 62.51

The trading in PCAR on Monday produced a failed rally at the $60.00 level. We see this as another entry point to buy puts. Our target is the rising 100-dma but we're going to use an official exit in the $56.00-55.50 range (for now). We are using a wide stop loss but more conservative traders may want to try and keep theirs near $61.00 to reduce their risk.

Picked on October 29 at $ 59.42
Change since picked: + 0.08
Earnings Date 10/24/06 (confirmed)
Average Daily Volume = 1.4 million

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Pantry Inc. - PTRY - close: 54.02 change: -0.03 stop: 57.05

PTRY traded sideways in a relatively narrow range as the stock tested technical support at its 50-dma on Monday. We're suggesting put positions now with PTRY under $55.00 but more conservative traders may want to wait for a decline under $52.50 before opening new put plays. Conservative traders may also want to consider a tighter stop (maybe near $56.00). Our target is the $48.00-47.00 range. We do not want to hold over the November 16th earnings report. We would consider this an aggressive entry point above $52.50.

Picked on October 29 at $ 54.05
Change since picked: - 0.03
Earnings Date 11/16/06 (confirmed)
Average Daily Volume = 383 thousand

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Univ.Forest Prod. - UFPI - cls: 45.70 chg: +0.44 stop: 50.01

UFPI is still trying to bounce from the $45.00 level. Shares hit a new relative low this morning at $44.94, which probably hit some stop losses but the stock quickly reversed higher albeit on below average volume. We would expect a rebound toward the 10-dma and potentially toward the $48.00 region. Wait for a failed rally or a new relative low before opening new plays. More conservative traders may want to tighten their stop loss and reduce their risk. We're aiming for a decline into the $41.00-40.00 range. Our wide stop loss makes this a more aggressive play.

Picked on October 24 at $ 46.13
Change since picked: - 0.43
Earnings Date 10/16/06 (confirmed)
Average Daily Volume = 192 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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Bear Stearns - BSC - cls: 152.48 chg: +3.27 stop: n/a

We are getting plenty of opportunities to open strangle plays at the $150.00 level. Shares of BSC reversed again and the 2.19% gain today eliminated a lot of Friday's losses. Overall the technical indicators still look bearish but it will be interesting to see if BSC can produce any sort of follow through on this move or is it just end of month window dressing. For a large number of mutual funds their year end is October 31st. Our suggested entry range to open strangles is the $149.00-151.00 range. The closer to $150.00 the better. The options in our strangle are the November 155 call (BSC-KK) and the November 145 put (BSC-WI). Our estimated cost was $4.00. We're planning to exit if either option rises to $6.00 or more.

Picked on October 22 at $150.19
Change since picked: + 2.29
Earnings Date 12/14/06 (unconfirmed)
Average Daily Volume = 1.6 million

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Cephalon - CEPH - close: 70.44 change: +1.09 stop: n/a

Today's bounce in CEPH gave us a better entry point to open strangles at the $70.00 mark. If you missed the $70.00 mark CEPH still offered entry points with its sideways trading between $70.15 and $70.60 for the second half of the session. We are suggesting strangle entries in the $69.00-71.00 range with preferred entries near $70.00. We do not want to open plays after the November 2nd earnings report. The options in our strangle are the December $75 call (CQE-LO) and the December $65 put (CQE-XM). Our estimated cost was $3.45. We plan to see if either option rises to $4.90 or more.

Picked on October 29 at $ 69.35
Change since picked: + 1.09
Earnings Date 11/02/06 (confirmed)
Average Daily Volume = 2.0 million

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ConocoPhillips - COP - close: 59.80 chg: -1.39 stop: n/a

Oil stocks were sliding lower after a sharp decline in crude oil futures today. Shares of COP lost 2.2% on above average volume. The close under its 50-dma and the $60.00 level is bearish. We're not suggesting new positions at this time and we only have three weeks left before November strikes expire. Our estimated cost was about $1.15. We are suggesting an exit if either option rise to $2.00 or more. Our suggested options were the November $65 call (COP-KM) and the November $55 put (COP-WK).

Picked on October 15 at $ 60.03
Change since picked: - 0.23
Earnings Date 10/25/06 (confirmed)
Average Daily Volume = 9.8 million

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Blue Nile - NILE - cls: 39.10 chg: +0.18 stop: n/a

Shares of NILE spent the session trading sideways as investors waited for the company's earnings report that was due out after the closing bell tonight. NILE reported earnings that were a penny better than estimates and revenues came in above analysts' expectations. Guidance appeared to be bullish but shares of NILE were trading lower, near $36, after hours. Now that the earnings news is out we are no longer suggesting new positions. Our estimated cost was $2.40 and we're planning to sell if either side of our strangle rises to $3.90. The options in our suggested strangle are the January $45 call (JWU-AI) and the January $35 put (JWU-MG).

Picked on October 29 at $ 38.92
Change since picked: + 0.18
Earnings Date 10/30/06 (confirmed)
Average Daily Volume = 226 thousand

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Whole Foods - WFMI - close: 64.90 change: +0.15 stop: n/a

WFMI experienced some volatility this morning. Shares gapped open lower and traded to $63.10 thanks to an analyst downgrade before the opening bell. Fortunately for us the stock rallied back toward the $65.00 level and continued to oscillate back and forth across the $65 mark offering us entry points to open new strangle positions. Our preferred entry point to open strangles is at $65.00 but we're suggesting a $64.00-66.00 entry range. The company's earnings report is coming up on November 2nd and we're planning to hold over the announcement. Our estimated cost is $3.15 and we're planning to sell if either side of our strangle hits $5.40 or more. The options in our suggested strangle are the December $70 call (FMQ-LN) and the December $60 put (FMQ-XL).

Picked on October 29 at $ 64.75
Change since picked: + 0.15
Earnings Date 11/02/06 (confirmed)
Average Daily Volume = 2.1 million
 

Dropped Calls

BP Prudhoe Bay - BPT - close: 71.59 chg: -2.50 stop: 72.45

Oil stocks were punished on Monday thanks a sharp decline in crude oil futures. This weighed heavily on BPT and shares lost 3.3% and fell back under its 50-dma. We had been waiting for a breakout over resistance at $75.00 but we're dropping BPT as a bullish candidate given today's weakness. It was our suggested strategy to buy calls at $75.05 but BPT never hit our trigger.

Picked on October xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 00/00/00 (unconfirmed)
Average Daily Volume = 421 thousand
 

Dropped Puts

StanCorp. - SFG - close: 46.27 change: +0.72 stop: 46.01

The bullish reversal in SFG continued into Monday. The stock broke out over resistance at $46.00 on strong volume. There has not been any specific news to account for the turnaround and aggressive traders may want to keep an eye on the stock for a potential bullish entry point. Today's high was near its six-month trendline of resistance. We have been waiting for a breakdown under support near $44.00. SFG has not hit our trigger to open plays at $43.89 so we're dropping it as a candidate.

Picked on October xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 10/26/06 (confirmed)
Average Daily Volume = 267 thousand
 

Dropped Strangles

None
 

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