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Call Updates

B.P.Prudhoe Bay - BPT - close: 75.30 chg: -0.13 stop: 73.75

Crude oil continued to see some profit taking. Investors were reacting to comments that OPEC was unlikely to actually meet its proposed production cuts. The upward momentum in the oil and oil service sectors has stalled out and it's very evident in shares of BPT. Shares of BPT have been consolidating sideways above support/resistance at the $75.00 level. Unfortunately, BPT now has a short-term bearish trend of lower highs to accompany the bearish turnaround in the technical indicators. There is still a chance that BPT will bounce from support near $75.00 and its 200-dma but we would definitely wait for a bounce, probably over $75.75, before considering new bullish positions. 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: + 0.05
Earnings Date 00/00/00 (unconfirmed)
Average Daily Volume = 219 thousand

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Biosite - BSTE - close: 48.90 change: -0.04 stop: 47.95

BSTE is still flirting with a breakdown under its bullish trend of higher lows. The technical picture has turned bearish and the lack of strength in the broader market doesn't help. We are not suggesting new positions and quite honestly more conservative traders may want to exit early right here. If we don't see a bounce soon we'll close this play early to limit any losses. We would wait for a rally past $50.25 before considering new call positions. Our target is the $54.50-55.00 range. FYI: The P&F chart points to a $65 target.

Picked on December 05 at $ 50.05
Change since picked: - 1.15
Earnings Date 02/07/07 (unconfirmed)
Average Daily Volume = 263 thousand

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Centex - CTX - close: 56.20 change: +0.05 stop: 53.99

We still don't see any real change in CTX. The stock, like the sector index, is consolidating sideways. The group has seen a consolidation lower the past few days and upward momentum has vanished which is turning the technical indicators toward bearish signals. CTX is still above support near $55.00 so we're not ready to abandon the play yet. However, we would be very cautious and hesitant about opening new positions. Currently 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. FYI: The Point & Figure chart points to a $77 target.

Picked on December 03 at $ 55.89
Change since picked: + 0.31
Earnings Date 01/23/07 (unconfirmed)
Average Daily Volume = 2.0 million

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Diamond Offshore - DO - close: 80.60 change: -0.90 stop: 76.99

Yesterday's relative strength in DO failed to make an appearance today. The stock lost 1.1% and is nearing short-term support at its rising 10-dma and the $80 level. The stock's upward trend is still intact but we're concerned that shares might see a stronger consolidation. We would look for a dip back toward the $78 region near the 200-dma (around 78.55). 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: + 0.01
Earnings Date 01/26/07 (unconfirmed)
Average Daily Volume = 3.8 million

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Enerplus - ERF - close: 46.06 change: -0.25 stop: 44.45

ERF erased yesterday's gains with some profit taking this morning. The stock is struggling to maintain its bullish momentum and we would hesitate to open new positions at this time. A dip back toward the $45 level might be around the corner. Traders may want to tighten their stop loss toward the $45.00 level. The Point & Figure chart is bullish and points to a $64 target but shows potential resistance near $52. We are aiming for a rise into the $50.00-51.00 range.

Picked on November 29 at $ 46.01
Change since picked: + 0.05
Earnings Date 11/10/06 (confirmed)
Average Daily Volume = 973 thousand

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KB Home - KBH - close: 51.19 change: -0.45 stop: 49.45

As KBH continues to consolidate lower it is turning the technical picture more and more bearish. Today's 0.8% decline helped produce a new MACD sell signal on the daily chart. Yet we're not quite ready to close this play with KBH still trading above support near $50.00 and its simple 200-dma. A bounce near $50 could be used as a new entry point but right now we'd probably look for a relatively significant bounce.

Picked on December 03 at $ 52.04
Change since picked: - 0.85
Earnings Date 03/00/07 (unconfirmed)
Average Daily Volume = 2.7 million

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L-3 Comm. - LLL - close: 81.73 change: -0.70 stop: 79.99

LLL did not escape the selling in tech stocks on Tuesday. Shares lost 0.8%. More importantly the stock broke down under what should have been support at the $82.00 level. Due to this breakdown more conservative traders may want to exit early right here to cut their losses. We still see additional support near $80, which is underpinned by its rising 50-dma. We're not suggesting new positions at this time. Our target is the $88.00-90.00 range.

Picked on December 04 at $ 83.81
Change since picked: - 2.08
Earnings Date 01/25/07 (unconfirmed)
Average Daily Volume = 840 thousand

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Lockheed Martin - LMT - cls: 90.92 change: -0.41 stop: 87.65

LMT is still consolidating lower toward what should be support at the $90.00 level. We are somewhat concerned by the bearish turnaround in the technical indicators. We've already warned readers about a bearish divergence between price and its MACD and now the MACD is nearing a new sell signal. More conservative traders may want to tighten their stops toward $90.00. 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: + 0.30
Earnings Date 01/23/07 (unconfirmed)
Average Daily Volume = 2.1 million

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Sepracor - SEPR - close: 57.23 chg: +0.66 stop: 54.69

SEPR displayed some relative strength as traders bought the bounce from $56.00. Aggressive traders might want to consider new bullish positions. We're not suggesting new plays at this time. Our target for SEPR is the $59.50-60.00 range.

Picked on November 19 at $ 54.69
Change since picked: + 2.54
Earnings Date 01/25/07 (unconfirmed)
Average Daily Volume = 2.3 million

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Valero Energy - VLO - close: 54.71 change: -1.03 stop: 53.45

VLO completely erased yesterday's gains and once again closed under what should have been support in the $55.00-54.75 region. More conservative traders may want to exit early right now. We are going to wait and see if VLO bounces from the $54.00 level. Our target is the $59.50-60.00 range.

Picked on December 03 at $ 55.85
Change since picked: - 1.14
Earnings Date 01/30/07 (unconfirmed)
Average Daily Volume = 14.3 million

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MEMC Electronic - WFR - close: 42.11 change: -1.21 stop: 39.49

WFR is another stock that erased yesterday's gains. This morning before the bell on analyst firm downgraded the stock. Shares of WFR gapped open lower but the stock did manage to bounce from its intraday lows. We would watch for a bounce from its rising 10-dma or even the $40 level as a new entry point. Our target is the $47.50-50.00 range. The P&F chart is bullish with a $48 target.

Picked on December 10 at $ 42.40
Change since picked: - 0.29
Earnings Date 01/25/07 (unconfirmed)
Average Daily Volume = 4.4 million
 

Put Updates

Expeditors Intl.- EXPD - close: 42.51 change: -0.54 stop: 46.05

EXPD slipped lower again for the sixth day in a row. The above average volume on the decline is a big clue that EXPD should have more weakness to come. Our short-term target is the $40.15-40.00 range. More aggressive traders may want to aim for the August lows.

Picked on December 10 at $ 43.68
Change since picked: - 1.17
Earnings Date 02/06/07 (unconfirmed)
Average Daily Volume = 1.4 million

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Genzymme - GENZ - close: 61.01 change: -1.11 stop: 64.55*new*

Today's decline in GENZ could be another bearish entry point. The stock produced a failed rally under its descending 10-dma. Plus, today's session produced a bearish engulfing candlestick pattern and did so on above average volume. We are going to adjust our stop loss to $64.55. The Point & Figure chart looks pretty bearish with a quadruple-bottom breakdown sell signal with a $51 target. Our target is the $58.00-56.00 range.

Picked on December 03 at $ 62.77
Change since picked: - 1.76
Earnings Date 02/15/07 (unconfirmed)
Average Daily Volume = 1.9 million

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NewMarket - NEU - close: 59.81 change: -1.26 stop: 62.25

The bears are probably circling shares of NEU. The stock looks weak and shares lost over 2% to close under the $60 level and its simple 100-dma both of which should have been short-term support. Aggressive traders may want to buy puts now. We are suggesting a trigger to open plays at $58.25. If triggered our target will be the $53.50-52.50 range, which is an adjustment from our original target due to potential support at its rising 200-dma.

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

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Yahoo! Inc. - YHOO - close: 26.75 chg: +0.26 stop: 27.05

YHOO spiked higher at the open this morning after news hit that the company opened its new "Panama" ad system to the public. Unfortunately for shareholders the rally faded from its highs but still managed to close with a 0.9% gain. We are suggesting that readers wait for a breakdown under support near $26.00 and its 50-dma. Therefore we're suggesting a trigger to buy puts at $25.85. If triggered our target is the $22.65 level near the October low. More aggressive traders may want to aim lower.

Picked on December xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 01/16/07 (unconfirmed)
Average Daily Volume = 29.3 million

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YUM Brands - YUM - close: 57.98 change: -1.52 stop: 60.51

The ongoing E.coli scare at its Taco Bell outlets continued to undermine investor confidence in the stock. Giving YUM a little push lower this morning was an analyst firm downgrade. Shares gapped open lower at $59.15 and then plunged to a 2.55% decline. Our suggested entry point to buy puts was at $58.49 so the play is now open. Our target is the $55.75-55.00 range.

Picked on December xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 02/07/07 (unconfirmed)
Average Daily Volume = 1.6 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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Caterpillar - CAT - close: 62.28 chg: -0.79 stop: n/a

CAT's industry rival AGCO (NYSE:AG) issued a sales warning for 2007 and the news impacted shares of CAT, which fell 1.2%. This is bad news for our strangle play that was already suffering. At this point the strangle play is pretty much buried and we're just shoveling dirt on its grave until Friday. CAT has three days to stage a revival or a significantly steeper sell-off, which we don't see happening at this time. We're not suggesting new positions. 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: + 2.18
Earnings Date 01/19/06 (unconfirmed)
Average Daily Volume = 7.7 million

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Blue Nile - NILE - cls: 34.53 chg: +1.04 stop: n/a

As expected shares of NILE gapped open higher and closed with a strong gain (+3%) following yesterday's news that the stock will replace STAR in the S&P smallcap 600 index. More conservative traders may want to exit now. 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: - 4.39
Earnings Date 10/30/06 (confirmed)
Average Daily Volume = 226 thousand
 

Dropped Calls

General Dynamics - GD - cls: 73.79 chg: -0.83 stop: 73.39

We have been stopped out of GD at $73.39. The stock broke down under the $74.00 level and under technical support at its simple 50-dma to dip to $73.31. We didn't see any specific news that might account for today's weakness in GD. The company did win another multimillion dollar contract from the military. We do note that today's decline helped produce a new MACD sell signal.

Picked on November 29 at $ 74.35
Change since picked: - 0.56
Earnings Date 01/24/07 (unconfirmed)
Average Daily Volume = 1.4 million
 

Dropped Puts

None
 

Dropped Strangles

None
 

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