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Call Updates

Lockheed Martin - LMT - cls: 93.69 change: +1.67 stop: 89.75

Shares of LMT helped lead the rally in defense stocks. The DFI index rose 0.9% while LMT rallied 1.8% to hit new highs. We didn't see any specific news to account for LMT's strength other than a successful test flight of its new F-35 fighter jet and another contract win for the U.S. air force. 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: + 3.07
Earnings Date 01/23/07 (unconfirmed)
Average Daily Volume = 2.1 million

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Altria Group - MO - close: 87.98 change: +0.83 stop: 84.75

Shares of MO also displayed some relative strength today. The stock hit another new high and closed with a 0.9% gain. While we remain bullish on the stock be ready for some volatility tomorrow. We do not know how investors will react to news out late tonight that Altria's Kraft (KFT) unit plans to take a $245 million non-cash "impairment" charge (source: Reuters). If MO does dip tomorrow watch for a bounce near $87 or $86 as a potential entry point to buy calls. Broken resistance in the $85.00-85.60 region should offer support. We are targeting a rally into the $92.50-95.00 range. Expect some round-number resistance near $90.00. The P&F chart currently points to a $114 target. We do not want to hold over the late January earnings report.

Picked on January 04 at $ 87.65
Change since picked: + 0.33
Earnings Date 01/31/07 (unconfirmed)
Average Daily Volume = 8.8 million

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Reynolds American - RAI - cls: 64.63 chg: +0.54 stop: 64.90

There is no change from our previous updates on RAI. The stock is trying to bounce but remains under resistance. It's our plan to buy calls on a breakout over resistance in the $66.00-66.50 range. Our suggested trigger to open call plays is at $66.55. If triggered our target is the $69.90-70.00 range. More aggressive traders may want to aim higher. FYI: If RAI doesn't rebound soon we'll drop it as a bullish candidate.

Picked on January xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 02/07/07 (unconfirmed)
Average Daily Volume = 1.2 million

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Sepracor - SEPR - close: 61.56 change: -0.32 stop: 59.65

We were expecting more relative strength out of SEPR but the stock struggled with resistance near $62 all afternoon. More traders may want to try our suggestion for conservative investors to wait for a move over $62.50 or $63.00 before initiating call positions. We are going to target the January 2005 highs with an exit target of $66.45. More aggressive traders may want to aim higher since the P&F chart points to a $68 target.

Picked on January 07 at $ 61.89
Change since picked: - 0.32
Earnings Date 01/27/07 (unconfirmed)
Average Daily Volume = 2.2 million
 

Put Updates

Cummins Inc. - CMI - close: 115.93 change: -0.06 stop: 118.15

There is no change from our weekend play description on CMI. We are waiting for a breakdown under support near $115.00 and its exponential 200-dma. More importantly CMI is poised to breakdown under its two-year trendline of support. If that occurs we want to be ready to capture the move. We are suggesting a trigger to buy puts at $114.50. If triggered we have two targets. Our conservative target is $110.50 and our aggressive target is the $106.00 level. Currently the Point & Figure chart has a triple-bottom breakdown sell signal with a $96 target but is also testing support in the $114-115 region. We do not want to hold over the late January or early February earnings report.

Picked on January xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 01/29/07 (unconfirmed)
Average Daily Volume = 1.0 million

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Group 1 Auto - GPI - close: 49.70 change: -0.08 stop: 52.01

This morning before the opening bell GPI issued an earnings warning for 2007. Analysts were looking for earnings of $4.28 a share for the year and GPI forecasts between $4.00 and $4.25 for the year. The stock gapped down to open at $48.82 and then dipped to $47.11 before bouncing back. We had a suggested entry point to buy calls at $49.25 so the gap open lower is now our entry point. If you are still on the sidelines we would wait and watch for a failed rally in the $50 region as a potential entry point to buy puts again. Our target is the $45.15-45.00 range. We do not want to hold over the February earnings report.

Picked on January 08 at $ 48.82 *gap down entry*
Change since picked: + 0.88
Earnings Date 02/19/07 (unconfirmed)
Average Daily Volume = 371 thousand

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3M Co. - MMM - close: 77.60 change: +0.17 stop: 80.01

MMM managed a minor bounce this afternoon thanks in part to some positive analyst comments from Credit Suisse, who also raised their price target on MMM to $95. Technically MMM still looks bearish with a steady trend of lower highs. While we are suggesting plays here more conservative traders may want to wait for a drop under the exponential 200-dma (near $77.00) or the 100-dma (near $76.35). 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: - 0.72
Earnings Date 01/30/07 (confirmed)
Average Daily Volume = 2.8 million

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NewMarket - NEU - close: 55.59 change: -0.59 stop: 60.35

NEU continues to sink and the stock looks poised to hit our target in the $55.00-54.75 range. More conservative traders may want to exit early now or just above the $55.00 level, which might be support given the rising 200-dma (currently near 54.98). We're not suggesting new positions at this time.

Picked on December 14 at $ 59.11
Change since picked: - 3.52
Earnings Date 01/29/07 (unconfirmed)
Average Daily Volume = 275 thousand

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Sears Holding - SHLD - cls: 165.32 chg: -0.75 stop: 171.55

Retail stocks failed to bounce today. Shares of SHLD slipped 0.45% and further flirted with a breakdown under $165 and its rising 100-dma. We are still somewhat concerned about a potential oversold bounce from here so be prepared for it. The $170 level should act as short-term overhead resistance. Readers can use another failed rally under $170 or a new decline under $165.00 as a new entry point. The Point & Figure chart points to a $152 target. Our target is the $162.00-160.00 range. FYI: In the news today Sears announced it was opening an online showroom in Second Life, which is an online virtual world.

Picked on December 22 at $167.90
Change since picked: - 2.58
Earnings Date 02/15/07 (unconfirmed)
Average Daily Volume = 1.9 million

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Vornado Realty Trust - VNO - cls: 118.14 chg: -1.41 stop: 122.65

Shares of VNO continue to sink and the stock lost 1.1% on strong volume today. We don't see any big changes from our new play description from this weekend. We are suggesting puts with VNO under $120. We have two targets. Our conservative target is $115.50, which is above potential support at its rising 100-dma. Our aggressive target is the $111.00 level, which is above potential support at $110.

Picked on January 07 at $119.55
Change since picked: - 1.41
Earnings Date 02/27/07 (unconfirmed)
Average Daily Volume = 945 thousand

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YUM Brands - YUM - close: 58.05 change: -0.14 stop: 60.26

YUM dipped to a new two-month low on Monday with the stock breaking support on an intraday basis. Readers can choose to open new put positions now or look for a new relative low under $57.40 before opening plays. Our target is the $55.75-55.00 range but keep an eye on the rising 100-dma as potential support. FYI: A decline under $57.00 would reverse the P&F chart into a new sell signal.

Picked on December 12 at $ 58.49
Change since picked: - 0.44
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: 39.28 chg: +0.75 stop: n/a

NILE continues to rally and the stock hit new two-month highs today. We do not see any changes from our weekend update. January options expire soon. Odds are that the slow and steady buying in NILE is due to funds picking up shares before NILE is added to the S&P smallcap index, which was announced a few weeks ago. We're not suggesting new positions. We are adjusting our target to breakeven at $2.40, which was our estimated cost. 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: + 0.36
Earnings Date 10/30/06 (confirmed)
Average Daily Volume = 226 thousand
 

Dropped Calls

None
 

Dropped Puts

None
 

Dropped Strangles

None
 

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