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Call Updates

Burlington Nor.SantaFe - BNI - cls: 76.07 chg: -2.54 stop: 74.49*new*

Wow! You have to hand it to Merrill Lynch. Their timing was perfect. Shares of BNI and the rest of the railroad sector had just begun to breakout from a multi-week consolidation pattern on Monday. This morning before the bell MER yanked the carpet out from under the group with two downgrades. The analyst firm downgraded BNI and CNI from "buy" to a "neutral". Shares of BNI gapped open lower at $77.40 and closed with a 3.2% loss just above its simple 200-dma. The move forms a short-term bearish reversal, which is also very evident on the railroad sector index. More conservative traders may want to exit early to cut their losses now. We're not willing to give up yet with BNI still north of $75.00. However, we are going to raise our stop loss to $74.49.

Picked on December 04 at $ 77.26
Change since picked: - 1.19
Earnings Date 01/23/07 (unconfirmed)
Average Daily Volume = 2.5 million

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B.P.Prudhoe Bay - BPT - close: 75.10 chg: -1.55 stop: 73.75*new*

BPT displayed some relative weakness on Wednesday. It is a mystery as to why the stock sold off. Shares spent most of the day consolidating sideways before plunging lower in the last hour of trading. The stock managed a very minor bounce from support near the $75 level. We would be very cautious here and we're raising our stop loss to $73.75. More conservative traders may want to use a tighter stop loss. Today's decline might just be profit taking so a bounce from $75 is technically a good place to look for a new entry point. Our target is the $79.75-80.00 range. The P&F chart is bullish with an $85 target.

Picked on November 29 at $ 75.25
Change since picked: - 0.15
Earnings Date 00/00/00 (unconfirmed)
Average Daily Volume = 219 thousand

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Biosite - BSTE - close: 49.89 change: -0.05 stop: 47.49

BSTE is still trying to breakout past resistance at the $50 level. Traders bought the dip at $49.14 this morning but the stock was unable to hold its gains above the $50 level. Today's bounce from its rising 10-dma might be used as a new entry point but more conservative traders may want to wait for a rally past $50.53, which is above the bottom of its May gap down, which might be resistance. Our target is the $54.50-55.00 range.

Picked on December 05 at $ 50.05
Change since picked: - 0.06
Earnings Date 02/07/07 (unconfirmed)
Average Daily Volume = 263 thousand

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Centex - CTX - close: 57.84 change: +1.08 stop: 52.45

Homebuilding stocks were the best performing sector today. The DJUSHB rose 2.1% and the HGX climbed 1.6%. Shares of CTX rallied 1.9% to close at a new seven-month high. The rally in builders was fueled by positive comments from the annual homebuilders convention held in New York today. Analysts and industry experts were predicting a low in the first half of 2007. We remain optimistic but we're not suggesting new positions at this time. We have two targets. Our conservative target is the $59.50-60.00 range. Our aggressive target is the $63.50-64.00 range. Be aware that the bottom of CTX's April 2006 gap down near $57.25 might be resistance as may the to of its gap near $60.00.

Picked on December 03 at $ 55.89
Change since picked: + 1.95
Earnings Date 01/23/07 (unconfirmed)
Average Daily Volume = 2.0 million

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Diamond Offshore - DO - close: 80.92 change: +1.56 stop: 75.75

Oil service stocks out performed the rest of the energy sector today. Shares of DO managed a 1.9% rally and a close back above round-number resistance at the $80 level. This looks like another entry point for bullish positions. Our target is the $85.00-86.00 range near its early July high. The P&F chart points to a $92 target.

Picked on December 03 at $ 80.59
Change since picked: + 0.33
Earnings Date 01/26/07 (unconfirmed)
Average Daily Volume = 3.8 million

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Enerplus - ERF - close: 45.90 change: -0.27 stop: 44.45 *new*

It looks like momentum in shares of ERF is beginning to wane. We are going to try and reduce our risk by raising the stop loss to $44.45. More conservative traders might want to put theirs closer to the $45 level, which should act as short-term support. Overall the trend in oil stocks is still bullish and today just looks like a pause in the rally. Our target is the $50.00-51.00 range.

Picked on November 29 at $ 46.01
Change since picked: - 0.11
Earnings Date 11/10/06 (confirmed)
Average Daily Volume = 973 thousand

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EOG Resources - EOG - close: 69.35 change: +0.02 stop: 67.99

We are still concerned with the relative weakness in EOG. Today's failed rally above the $70 level doesn't help the bulls' case. Technicals are turning bearish. More conservative traders may want to exit early right here. We're going to give EOG one more day to show some strength or we'll close the play and look elsewhere.

Picked on November 29 at $ 72.06
Change since picked: - 2.71
Earnings Date 10/25/06 (unconfirmed)
Average Daily Volume = 3.6 million

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General Dynamics - GD - cls: 75.40 chg: -0.36 stop: 71.90

Wednesday's pause in the market's rally was felt in shares of GD. The stock spent the session trading sideways. We don't see any changes from our previous updates. Our target is the $78.00-80.00 range. The Point & Figure chart points to an $82 target. More aggressive traders might want to aim higher than $80 (or $82) given the breakout in the sector index.

Picked on November 29 at $ 74.35
Change since picked: + 1.05
Earnings Date 01/24/07 (unconfirmed)
Average Daily Volume = 1.4 million

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KLA-Tencor - KLAC - close: 51.92 chg: +0.34 stop: 49.49

Semiconductor stocks managed to perform better than the rest of the tech sectors. The SOX index rose 0.35% and shares of KLAC out performed its peers with a 0.65% gain. The stock looks poised to move higher. Currently our target is the $54.50-55.00 range.

Picked on November 14 at $ 50.81
Change since picked: + 1.03
Earnings Date 01/00/07 (unconfirmed)
Average Daily Volume = 3.9 million

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KB Home - KBH - close: 53.49 change: +1.32 stop: 47.99

Positive comments about a potential bottom in the homebuilders helped lift shares of KBH to a 2.5% gain. Volume behind the move was above average, which is bullish. Shares are hitting new six-month highs and look poised to move higher. Our target is the $57.50-60.00 range. The P&F chart looks pretty bullish with a spread triple-top breakout buy signal with a $73 target.

Picked on December 03 at $ 52.04
Change since picked: + 1.45
Earnings Date 03/00/07 (unconfirmed)
Average Daily Volume = 2.7 million

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L-3 Comm. - LLL - close: 83.45 change: +0.15 stop: 79.99

LLL is still slowing inching higher. Traders can choose to buy calls here or look for a possible dip back towards the $82 region, which should be new support. Our target is the $88.00-90.00 range. The Point & Figure chart forecasts a $104 target.

Picked on December 04 at $ 83.81
Change since picked: - 0.51
Earnings Date 01/25/07 (unconfirmed)
Average Daily Volume = 840 thousand

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Lockheed Martin - LMT - cls: 92.28 change: -0.13 stop: 87.65

The rally in LMT also took a rest today. The stock spent the session trading sideways near $92. Traders can choose to buy calls here or wait for a potential dip back towards the $90 region, which should now be support. We have two targets. Our conservative target is the $94.85-95.00 range. Our more aggressive target is in the $99-100 range.

Picked on November 29 at $ 90.62
Change since picked: + 1.66
Earnings Date 01/23/07 (unconfirmed)
Average Daily Volume = 2.1 million

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Merck Co. - MRK - close: 44.67 change: -0.34 stop: 43.29

Investors did a little profit taking in MRK today after the company reaffirmed its earnings guidance. The stock dipped toward the $44 level this morning but slowly began to climb from its lows. The $44 level is bolstered by technical support with its rising 50-dma. We would use the dip as a new entry point to buy calls. Our target is the $49.50-50.00 range.

Picked on December 03 at $ 45.06
Change since picked: - 0.39
Earnings Date 01/25/07 (unconfirmed)
Average Daily Volume = 10.3 million

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Research In Motion - RIMM - cls: 135.44 chg: -0.51 stop: 129.99

RIMM spent another day consolidating sideways. The last couple of weeks have produced a pennant shaped consolidation with higher lows and lower highs. Normally these are neutral patterns and the stock can breakout either direction. Given the momentum in RIMM and the bullish trend in the major indices we suspect that RIMM will breakout higher. We are only aiming for the $142 level but aggressive traders may want to aim higher and use a rise past $137 as a new entry point to buy calls since it would be a bullish breakout from this pattern.

Picked on November 28 at $134.29
Change since picked: + 1.15
Earnings Date 12/21/06 (unconfirmed)
Average Daily Volume = 7.2 million

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Sepracor - SEPR - close: 57.51 chg: +0.39 stop: 53.61

SEPR continues to inch higher. Shares rose 0.68% but volume came well below the daily average. We remain bullish but would not suggest new positions at this time. Our target for SEPR is the $59.50-60.00 range. In the news this morning SEPR issued a press release stating that studies have shown no significant difference in people's driving skills in the morning if they used SEPR's sleeping aid Lunesta the night before.

Picked on November 19 at $ 54.69
Change since picked: + 2.82
Earnings Date 01/25/07 (unconfirmed)
Average Daily Volume = 2.3 million

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Thomas & Betts - TNB - close: 52.87 chg: -0.36 stop: 49.90

We don't see any changes from our previous updates. TNB, like many stocks that have been in rally mode, took a breather today. The stock is approaching short-term resistance at the $54.00 level. Our target is the $56.00-57.00.

Picked on November 12 at $ 51.36
Change since picked: + 1.51
Earnings Date 01/23/07 (unconfirmed)
Average Daily Volume = 471 thousand

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Valero Energy - VLO - close: 56.28 change: +0.48 stop: 52.85

Oil refiner VLO displayed some relative strength with a 0.8% gain. However, the stock actually closed off its highs of the session and it might suggest more profit taking ahead. Some of our readers might want to watch for a dip towards $55 as a new entry point. Our target is the $59.50-60.00 range.

Picked on December 03 at $ 55.85
Change since picked: + 0.43
Earnings Date 01/30/07 (unconfirmed)
Average Daily Volume = 14.3 million
 

Put Updates

Genzymme - GENZ - close: 62.96 change: +0.01 stop: 66.05

Wednesday marked the second time in four days that shares of GENZ have managed a bounce from the $62.00 level. We suspect that the stock will see further strength tomorrow. Readers can watch for a failed rally near $64.00 (and its simple 10-dma) as a new entry point for puts. However, we would be somewhat cautious about opening new put plays with the major averages showing so much strength. More conservative traders may want to use a tighter stop loss. Our target is the $58.00-56.00 range.

Picked on December 03 at $ 62.77
Change since picked: + 0.19
Earnings Date 02/15/07 (unconfirmed)
Average Daily Volume = 1.9 million

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NewMarket - NEU - close: 62.06 change: +0.07 stop: 62.25

We do not see any changes from our previous updates on NEU. Currently we're waiting for a breakdown under support. Our suggested entry point to open put plays is at $58.25. If triggered at $58.25 our target would be the $52.50-52.00 range.

Picked on December xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 01/29/07 (unconfirmed)
Average Daily Volume = 275 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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Caterpillar - CAT - close: 63.05 chg: +0.90 stop: n/a

CAT rose 1.44% and is nearing the November highs and technical resistance at its 50-dma. A breakout above these levels would be pretty bullish and give new hope for our strangle play. We are not suggesting new positions at this time. Our estimated cost was about $0.75. We want to exit if either options rises to $1.50. The options in our strangle are the December $65 call (CAT-LM) and the December $55 put (CAT-XK).

Picked on November 08 at $ 60.10
Change since picked: + 2.95
Earnings Date 01/19/06 (unconfirmed)
Average Daily Volume = 7.7 million

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Blue Nile - NILE - cls: 34.69 chg: -0.23 stop: n/a

NILE produced another volatile session but managed to bounce from its lows and close with a 0.6% loss. We're not suggesting new positions at this time. 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: - 4.23
Earnings Date 10/30/06 (confirmed)
Average Daily Volume = 226 thousand
 

Dropped Calls

Petroleo Brasileiro - PBR - cls: 96.28 chg: -0.93 stop: 91.49

Target achieved. Some of the oil stocks hit some profit taking on Wednesday. PBR was one of them with a 0.9% decline. Yet before the downturn shares traded to $98.24. Our target was the $98-100 range.

Picked on November 29 at $ 91.51
Change since picked: + 4.77
Earnings Date 10/25/06 (unconfirmed)
Average Daily Volume = 2.6 million
 

Dropped Puts

None
 

Dropped Strangles

None
 

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