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Call Updates

Lockheed Martin - LMT - cls: 91.94 change: +0.34 stop: 88.99

LMT displayed some relative strength on Thursday. Shares rose 0.37% but closed off their best levels of the session. LMT's performance was better than the DFI defense index and the major market averages. The company announced a $931 million deal to sell twenty F-16s to Greece. LMT also announced another $50 million deal with the U.S. air force. We remain bullish on the stock with shares above $90.00 but more conservative traders might want to tighten their stops. 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: + 1.32
Earnings Date 01/23/07 (unconfirmed)
Average Daily Volume = 2.1 million

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MEMC Electronic - WFR - close: 40.16 change: -1.62 stop: 39.95

Warning! The situation in the semiconductors is not looking very good for the bulls. Both JBL and PMCS delivered bearish earnings news today. This drug the SOX index down to a 1.3% loss and near technical support at the SOX's simple and exponential 200-dma(s). Shares of WFR responded with a 3.8% decline toward support at the $40.00 level. More conservative traders may want to exit immediately. We suspect that the SOX and WFR might produce a bounce tomorrow. Traders might want to gamble on a bounce and try and exit near $42 if given the chance. If WFR fails to breakout over its 10-dma in the next day or two we will seriously consider an early exit ourselves! We're not suggesting new positions at this time.

Picked on December 10 at $ 42.40
Change since picked: - 2.24
Earnings Date 01/25/07 (unconfirmed)
Average Daily Volume = 4.4 million
 

Put Updates

Intuitive Surg. - ISRG - cls: 98.96 chg: -1.48 stop: 104.05*new*

Shares of ISRG continued to sell-off on Thursday. The stock broke down under round-number support at the $100 level and closed with a 1.47% decline. We don't see any serious changes from our previous updates but we will adjust our stop loss to $104.05. Our target is the $96.00-95.00 range. We do not want to hold over the early February earnings report.

Picked on December 18 at $102.05
Change since picked: - 3.09
Earnings Date 02/01/07 (unconfirmed)
Average Daily Volume = 938 thousand

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Mohawk Industries - MHK - cls: 74.76 chg: -0.18 stop: 79.01

There is still no change from our previous updates on MHK. The stock has spent the better part of three days trading sideways near support in the $74-75 region and its simple 200-dma. We would expect an oversold bounce toward short-term resistance in the $76-77 region (also its 10-dma near $76.36) but so far MHK has failed to bounce. If you are looking for a new entry point consider a new relative low under $74.00 or a failed rally near $76.00 or $77.00. Our target is the $70.75-70.00 range.

Picked on December 17 at $ 76.02
Change since picked: - 1.26
Earnings Date 02/22/07 (unconfirmed)
Average Daily Volume = 600 thousand

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3M Co. - MMM - close: 78.81 change: -0.02 stop: 80.01

Lack of follow through on the recent oversold bounce in MMM is good news for the bears. The early Thursday rally failed at $79.31 and MMM looks poised to move lower. We would consider put positions entered above $77 and its 200-dma as an aggressive, higher-risk entry point. More conservative traders can wait for a drop under $77 or at least the 200-dma near $77.50 before entering plays. 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: + 0.50
Earnings Date 01/19/07 (unconfirmed)
Average Daily Volume = 2.8 million

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NewMarket - NEU - close: 57.86 change: +0.67 stop: 62.01

Thursday's performance in NEU looks like another failed rally under its descending 10-dma. Readers can use this as a new entry point to buy puts. More conservative traders may want to consider tightening their stops toward the $60 region. Our target is the $55.00-54.00 range as we will try and exit just above the rising 200-dma. 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: - 1.25
Earnings Date 01/29/07 (unconfirmed)
Average Daily Volume = 275 thousand

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Sears Holding - SHLD - cls: 167.93 chg: -2.58 stop: 173.05

Investors appear to be concerned about the consumer and how much they are spending this holiday season. The RLX retail index has produced a sharp reversal in the last couple of weeks and today marks a bearish breakdown under the RLX's 50-dma and the 500 level. SHLD also dropped on Thursday with a 1.5% decline and a close under the $170 level. The close under short-term support at $168.00 is certainly bearish and traders may want to strongly consider opening new put positions right now. We were surprised to see that SHLD failed to hit our trigger at $167.90. The low was $167.92. Thus we're still on the sidelines but expect to see SHLD hit our entry point tomorrow. If triggered our target is the $162.00-160.00 range. Keep an eye on the simple 100-dma near $162.69, which might offer some support.

Picked on December xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 02/15/07 (unconfirmed)
Average Daily Volume = 1.9 million

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Yahoo! Inc. - YHOO - close: 25.48 chg: -0.11 stop: 27.05

Internet stocks continued to fall with GOOG, YHOO and EBAY all posting losses. The INX Internet index slipped 0.6%. We remain bearish on YHOO and traders can choose to open positions here or watch for a bounce and failed rally near $26.00 as a new entry point. 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 20 at $ 25.85
Change since picked: - 0.37
Earnings Date 01/16/07 (unconfirmed)
Average Daily Volume = 29.3 million

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YUM Brands - YUM - close: 58.55 change: -0.50 stop: 60.26 *new*

The oversold bounce in YUM is starting to show some fatigue. The stock lost 0.8% and closed back under its simple 10-dma again. Traders might want to use this as a new bearish entry point to buy puts. We're going to inch down our stop loss to $60.26. The $60.00 level and its 50-dma should remain overhead resistance. Our target is the $55.75-55.00 range.

Picked on December 12 at $ 58.49
Change since picked: + 0.06
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: 35.93 chg: +0.32 stop: n/a

We want to remind readers that we only have about four weeks left before January options expire. Keeping our timetable in mind more conservative traders may want to try and exit early and salvage some of their capital especially now given the rebound in NILE. Shares have been working their way higher even since the news hit that NILE would be added to the S&P smallcap 600 index. Thursday's session saw NILE rise 0.89% and breakout over its simple 50-dma. We are not suggesting new strangle positions in NILE 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: - 2.99
Earnings Date 10/30/06 (confirmed)
Average Daily Volume = 226 thousand
 

Dropped Calls

Sepracor - SEPR - close: 62.30 chg: +4.93 stop: 55.99

Target achieved and exceeded. Shares of SEPR soared on Thursday closing at new one-year highs. The rally was fueled by favorable news on the latest Medicare analysis and reimbursement rates on SEPR's Xopenex asthma drug. The positive news fueled some equally positive analyst comments and a raised price target from $61 to $75. Shares of SEPR gapped open higher at $60.61, dipped to $59.85, and then rallied to close up 8.59%. Our suggested target was the $59.50-60.00 range. Due to the gap open higher we would have exited at the open.

Picked on November 19 at $ 54.69
Change since picked: + 7.61
Earnings Date 01/25/07 (unconfirmed)
Average Daily Volume = 2.3 million
 

Dropped Puts

None
 

Dropped Strangles

None
 

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