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Call Updates

Baker Hughes - BHI - close: 75.87 change: -2.38 stop: 73.95*new*

Warning - bearish reversal alert! Crude oil lost over a dollar today and the oil stocks sank. The OIX oil index fell 2.59% while the OSX oil services index plunged 3.8%. It looks like investors are starting to lock in profits ahead of the yearend. BHI was actually upgraded this morning to a "buy" but that failed to save the stock price. Shares produced a bearish reversal in the form of a bearish engulfing candlestick pattern. There is a chance that BHI will bounce from support near $75.00 or its 200-dma near $74.00 so we're going to raise our stop loss to $73.95. However, more conservative traders may just want to exit early right now and cut their losses. We're not suggesting new positions at this time.

Picked on December 14 at $ 76.90
Change since picked: - 1.03
Earnings Date 02/09/07 (unconfirmed)
Average Daily Volume = 4.8 million

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Infosys - INFY - close: 53.64 change: -1.10 stop: 52.99

Warning! Technology stocks were hardest hit on Monday. The NASDAQ Composite lost 0.88% and the GSO software sector fell 1.5%. Shares of INFY under performed them both with a 2% decline. INFY is nearing what should be support at $53 and its rising 50-dma (currently near $52.94). If we don't see a decent bounce in INFY tomorrow we'll either be stopped out or we'll close the play early. Aggressive traders may want to buy a rebound from here while more conservative traders can wait for a new relative high over $55.50.

Picked on December 14 at $ 55.20
Change since picked: - 1.56
Earnings Date 01/10/07 (unconfirmed)
Average Daily Volume = 1.4 million

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Lockheed Martin - LMT - cls: 90.18 change: +0.14 stop: 88.99

We do not see any changes from our previous updates on LMT. We remain defensive here especially with the weakness in the defense indices today. Thus far LMT is holding on to support at the $90.00 level but it would not take much to push shares lower. More conservative traders may want to exit early right now to avoid further losses. A rebound from here could be used as a new entry point but it might make sense to wait for a new rise past $90.75 or $91.00 before opening new plays. 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: - 0.44
Earnings Date 01/23/07 (unconfirmed)
Average Daily Volume = 2.1 million

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NII Holdings - NIHD - close: 66.64 chg: -1.82 stop: 66.99

NIHD suffered some profit taking on Monday with a 2.6% decline. Volume was pretty strong on the drop, which is not a good sign for the bulls. Neither was the decline under the $67.50-67.00 level. Fortunately, we're still sitting on the sidelines waiting for a breakout over the $70 level. If we don't see a rebound soon we'll drop NIHD as a potential bullish candidate. Currently we're suggesting a trigger to buy calls at $70.25. If triggered our target is the $74.50-75.00 range. Aggressive traders may want to aim higher.

Picked on December xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 02/22/07 (unconfirmed)
Average Daily Volume = 1.6 million

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Sepracor - SEPR - close: 57.47 chg: +0.63 stop: 55.99

After two weeks of consolidating sideways it looks like SEPR is finally starting to show some strength. The stock rose 1.1% and looks poised to challenge short-term resistance at the $58.00 level. We're not suggesting new positions at this time. Our target for SEPR is the $59.50-60.00 range.

Picked on November 19 at $ 54.69
Change since picked: + 2.78
Earnings Date 01/25/07 (unconfirmed)
Average Daily Volume = 2.3 million

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MEMC Electronic - WFR - close: 42.28 change: -1.27 stop: 39.95

We need to usher some words of caution regarding WFR. The semiconductor sector bucked the trend in technology stocks today by posting a gain. Yet WFR under performed its peers today with a 2.9% loss and a failed rally at $44.00 followed by a breakdown under its 10-dma. The decline today is contributing to the deteriorating technicals. WFR's weakness might have been influenced by news this morning that a Taiwan solar-cell material plant suffered an explosion that killed two and will disrupt the plant's output. According to a Reuters article WFR had sub-contracted with the plant to make various wafer components. Odds are good that WFR could see a dip toward $41.00 or the $40 level, which should be support. We'd wait for a show of strength before considering new call positions. 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: - 0.12
Earnings Date 01/25/07 (unconfirmed)
Average Daily Volume = 4.4 million
 

Put Updates

Expeditors Intl.- EXPD - close: 42.21 chg: -1.12 stop: 45.05

Transportation stocks continued to sink in spite of a pull back in crude oil prices on Monday. Shares of EXPD under performed the market and its peers with a 2.58% decline. 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: - 1.47
Earnings Date 02/06/07 (unconfirmed)
Average Daily Volume = 1.4 million

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Mohawk Industries - MHK - cls: 76.04 chg: +0.02 stop: 79.01

It looks like bulls tried to buy the dip in MHK on Monday morning. The stock rebounded sharply at the open but quickly ran out of gas near its 10-dma overhead. The failed rally today looks like another entry point to buy puts. We are suggesting puts with MHK under $76.65, which is a short-term support/resistance level that shares just broke. We'll try and keep our risk to a minimum with a stop above Thursday's high. We would consider this a relatively higher-risk, aggressive play because MHK might have support at its 200-dma near $75 and at the late November dip near $74.00. Our target is the $70.75-70.00 range.

Picked on December 17 at $ 76.02
Change since picked: + 0.02
Earnings Date 02/22/07 (unconfirmed)
Average Daily Volume = 600 thousand

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3M Co. - MMM - close: 78.35 change: +0.04 stop: 80.01

We were expecting more of a follow through lower after MMM produced a failed rally and bearish engulfing candlestick pattern on Friday. Today's session isn't necessarily anything to be worried about. MMM produced a brief failed rally near $79 and its 50-dma. We are suggesting puts with the stock under $79.00 while more conservative traders can look for a decline under $78.00 or the 200-dma near $77.35 (or just wait for a drop under $77.00) before initiating plays. We would label this an aggressive, higher-risk entry point because MMM does have support at its 200-dma, which is also near the top of its October gap higher. The $75.00 level also offers a challenge for the bears since it to will probably be support. Our target is going to be the $72.50-70.00 range. The P&F chart is more bearish with a $47 target.

Picked on December 17 at $ 78.31
Change since picked: + 0.04
Earnings Date 01/19/07 (unconfirmed)
Average Daily Volume = 2.8 million

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NewMarket - NEU - close: 57.97 change: -1.54 stop: 62.01

NEU continues to show relative weakness. The stock lost 2.5% and produced another failed rally under its 10-dma, 100-dma and the $60 level today. We would use this as another entry point to buy puts. Our target is the $54.00-53.50 range. FYI: The P&F chart points to a $51 target. Plus, short-interest is about 7% of the 14.8 million-share float, which is probably enough to raise the risk of a short squeeze if NEU abruptly turns higher.

Picked on December 14 at $ 59.11
Change since picked: - 1.14
Earnings Date 01/29/07 (unconfirmed)
Average Daily Volume = 275 thousand

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Yahoo! Inc. - YHOO - close: 26.30 chg: -0.60 stop: 27.05

YHOO suddenly looks vulnerable again. The Internet sector hit some profit taking led by a $17.50 drop in shares of Google. YHOO slipped 2.2% and is testing support near $26.00 and its 50-dma. Currently we are 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. FYI: It might be worth noting that short interest is about 6.9% of YHOO's 1.2 billion share float.

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: 58.50 change: -0.18 stop: 60.51

We do not see any changes from our weekend update on YUM. The stock looks poised to move lower but we need to allow room for any oversold bounce to reach what should be resistance near $60.00. Our target is the $55.75-55.00 range.

Picked on December 12 at $ 58.49
Change since picked: + 0.01
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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Blue Nile - NILE - cls: 34.58 chg: -0.80 stop: n/a

NILE is turning lower again. Shares lost 2.2% after failing to breakout over the $36 level last week. We are not suggesting new strangle positions at this time. Keep in mind that we only have about five weeks before January options expire. More conservative traders may want to think about an early exit to salvage some capital if NILE doesn't begin to move soon. 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: - 4.34
Earnings Date 10/30/06 (confirmed)
Average Daily Volume = 226 thousand
 

Dropped Calls

B.P.Prudhoe Bay - BPT - close: 75.00 chg: -1.00 stop: 73.75

We are choosing an early exit to cut our losses on BPT. Oil stocks reversed sharply lower on Monday and BPT dropped back toward support at the $75.00 level. There is still a chance that BPT will bounce from $75.00 but we don't want to risk it any more.

Picked on November 29 at $ 75.25
Change since picked: - 0.25
Earnings Date 00/00/00 (unconfirmed)
Average Daily Volume = 219 thousand

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Centex - CTX - close: 55.60 change: -0.65 stop: 54.95

We have been waiting for a dip and bounce near support around the $55 level for days. We've seen the upward momentum in CTX and the housing stocks evaporate. Now after a less than inspiring report this morning about the sector's health we're choosing to exit early and cut our losses now. More aggressive traders may want to keep the play open since CTX may yet rebound from the $55 region. However, keep in mind that the technical picture has turned bearish, at least for the short-term and intermediate indicators.

Picked on December 03 at $ 55.89
Change since picked: - 0.29
Earnings Date 01/23/07 (unconfirmed)
Average Daily Volume = 2.0 million

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Enerplus - ERF - close: 46.24 change: -0.34 stop: 44.95

We are calling it quits on ERF. Our long-term view of the energy sector is bullish but short-term the group has become a big target for profit taking. We have been wary of ERF since the December 5th failed rally. The stock's upward momentum has vanished and some of the technical indicators are suggesting a consolidation lower. More aggressive traders may want to keep the play open as the stock still has a chance to bounce from the $46.00 or $45.00 levels.

Picked on November 29 at $ 46.01
Change since picked: + 0.23
Earnings Date 11/10/06 (confirmed)
Average Daily Volume = 973 thousand

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KB Home - KBH - close: 50.89 change: -0.84 stop: 49.95

We are choosing an early exit out of the homebuilders. The homebuilder confidence numbers came out today. The industry experts are bullish on a recovery in the second half of 2007. Short-term the sector is still poised for weakness. Shares of KBH under performed many of its peers today with a 1.6% decline. We've been warning readers for days with the lack of bullish momentum and the bearish turnaround in the technical indicators. More aggressive traders may want to stick to our plan and look for a bounce from what should be support near $50.00 and its 200-dma. A rebound past the $53.00 level would certainly be encouraging.

Picked on December 03 at $ 52.04
Change since picked: - 1.15
Earnings Date 03/00/07 (unconfirmed)
Average Daily Volume = 2.7 million

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L-3 Comm. - LLL - close: 79.00 change: -4.72 stop: 79.99

We have been stopped out of LLL at $79.99. The company issued an earnings warning this morning after announced that it lost a multi-billion army contract for translators and linguistics. Shares gapped open lower at $80.20 and dropped intraday to $78.00.

Picked on December 04 at $ 83.81
Change since picked: - 4.81
Earnings Date 01/25/07 (unconfirmed)
Average Daily Volume = 840 thousand

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Suncor Energy - SU - close: 78.29 change: -2.61 stop: 77.69

Oil stocks under performed the markets on Monday following a sharp decline in crude oil futures. Shares of SU under performed most of its peers with a 3.2% decline and a drop back under its 10-dma and the $80.00 level. There is still a chance that SU will bounce from the $78.00 level and its simple 200-dma. However, given the sharp turnaround in the oil stocks we don't want to risk it so we're suggesting an early exit.

Picked on December 14 at $ 81.63
Change since picked: - 3.34
Earnings Date 01/25/07 (unconfirmed)
Average Daily Volume = 3.0 million

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Valero Energy - VLO - close: 53.33 change: -1.79 stop: 53.99

We have been stopped out of VLO at $53.99. We have been cautious on the stock for several days now and today's sell-off in crude oil and the energy sector was too much for VLO and any support it had at the $54.00 level. Shares of VLO lost 3.2% and dropped toward its simple 50-dma.

Picked on December 03 at $ 55.85
Change since picked: - 2.52
Earnings Date 01/30/07 (unconfirmed)
Average Daily Volume = 14.3 million
 

Dropped Puts

None
 

Dropped Strangles

None
 

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