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Call Updates

Lockheed Martin - LMT - cls: 91.93 change: -0.14 stop: 88.99

After four days off investors came back to the stock market and could not decide what direction they wanted to go. The wild swings in the major averages today left most stocks, including LMT, close to unchanged. The company announced a couple of more defense deals today but it failed to have any significant impact on the share price. We remain somewhat concerned with LMT's bearish divergence between price and its MACD indicator. We're also noticing a potential bearish wedge pattern so traders may want to play with a tighter stop loss. We're not suggesting new positions at this time. Currently we have two targets. Our conservative target is the $94.85-95.00 range. Our aggressive target is the $99.00-100.00 range.

Picked on November 29 at $ 90.62
Change since picked: + 1.31
Earnings Date 01/23/07 (unconfirmed)
Average Daily Volume = 2.1 million
 

Put Updates

Mohawk Industries - MHK - cls: 76.10 chg: +1.24 stop: 79.01

We could not find any specific news to account for MHK's spike higher this morning or its 1.6% gain today. If anything we would have expected MHK to follow the homebuilders lower. The DJUSHB home construction index lost just over 3%. Volume behind MHK's gain today was a big improvement over the last couple of weeks so traders may want to turn defensive here and tighten their stop loss! We're not suggesting new positions at this time although a decline through $74 or its 200-dma might change our mind. Currently our target is the $70.75-70.00 range.

Picked on December 17 at $ 76.02
Change since picked: + 0.08
Earnings Date 02/22/07 (unconfirmed)
Average Daily Volume = 600 thousand

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3M Co. - MMM - close: 78.26 change: +0.33 stop: 80.01

There was little change in MMM today. The stock continues to consolidate sideways under $79 and above $77. This remains an aggressive entry point with the stock above its 200-dma. Traders may want to wait for a decline under $76.40 before initiating new positions. Our target is the $72.50-70.00 range. The P&F chart points to a $47 target.

Picked on December 17 at $ 78.31
Change since picked: - 0.05
Earnings Date 01/19/07 (unconfirmed)
Average Daily Volume = 2.8 million

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NewMarket - NEU - close: 57.35 change: -1.70 stop: 62.01

NEU displayed some relative weakness on Wednesday with a 2.8% decline. We did not see anything specific to account for the sharp drop. Chart readers will notice that this is the third failed rally near $60.35 in the last three trading days. More conservative traders might want to consider a tighter stop loss near $61.00 or $60.50. We hesitate to suggest new positions here with potential support for NEU at its rising 200-dma near $54.75. Due to the rising 200-dma we're adjusting our target to $55.00-54.75.

Picked on December 14 at $ 59.11
Change since picked: - 1.76
Earnings Date 01/29/07 (unconfirmed)
Average Daily Volume = 275 thousand

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Sears Holding - SHLD - cls: 167.28 chg: -0.65 stop: 173.05

The market volatility on Wednesday was mirrored in shares of SHLD. The stock saw a $5.51 trading range. Initially some positive comments from Wal-Mart (WMT) on its December same-store sales number helped the retail group. The sector should have also benefited from the sharp 4.5% decline in crude oil prices. Yet these two factors were not enough to sway the buyers and keep SHLD in the green. We remain bearish but traders might want to use a tighter stop loss closer to $172 or $171.50. We hesitate to open new put positions now with potential support at SHLD's rising 100-dma. Currently our target is the $162.00-160.00 range.

Picked on December 22 at $167.90
Change since picked: - 0.62
Earnings Date 02/15/07 (unconfirmed)
Average Daily Volume = 1.9 million

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Yahoo! Inc. - YHOO - close: 25.61 chg: +0.07 stop: 27.05

Stocks were poised to move higher for the first trading day of 2007 but the rally failed. Internet stocks struggled a bit after AMZN was downgraded. The rally in YHOO failed right at its trendline of resistance in the $26.26-26.30 region near its 50-dma and 100-dma. This looks like a new entry point to buy puts but more conservative traders might feel more comfortable looking for a new relative low first (under $25.00). Our target is the $22.65 level.

Picked on December 20 at $ 25.85
Change since picked: - 0.24
Earnings Date 01/16/07 (unconfirmed)
Average Daily Volume = 29.3 million

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YUM Brands - YUM - close: 58.86 change: +0.06 stop: 60.26

Unfortunately, there was little change in shares of YUM today. The stock continues to consolidate sideways. We don't see any significant changes from our weekend update. Readers can watch for a drop under $57.80 as a new entry point but bear in mind that our target is the $55.75-55.00 range.

Picked on December 12 at $ 58.49
Change since picked: + 0.37
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: 37.29 chg: +0.40 stop: n/a

Time is our enemy with our NILE strangle. We have less than three weeks left before January options expire and we're not suggesting new positions. The stock got a boost this morning after some rumors that the company could be a leveraged buy-out candidate. Our estimated cost was $2.40 and we're planning to sell if either side of our strangle rises to $3.90. Given our time frame readers may want to adjust their target to breakeven. 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: - 1.63
Earnings Date 10/30/06 (confirmed)
Average Daily Volume = 226 thousand
 

Dropped Calls

None
 

Dropped Puts

None
 

Dropped Strangles

None
 

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