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Call Updates

Lockheed Martin - LMT - cls: 93.60 change: -0.09 stop: 89.75

In the news today LMT announced that it had won a multi-year $655 million deal to work on the Trident missile system for the U.S. Navy. It could have been the news or the general upswing in defense stocks that helped lift LMT to a new intraday high of $94.67 this morning. Unfortunately, LMT failed to maintain those gains. We are not suggesting new plays 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: + 2.98
Earnings Date 01/23/07 (unconfirmed)
Average Daily Volume = 2.1 million

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Altria Group - MO - close: 88.12 change: +0.14 stop: 84.75

It looks like last night's news that Kraft was taking a big charge for the quarter failed to have any impact on shares of MO. Instead there was another round of positive comments about how MO's stock would benefit when (if) the company spins off the Kraft unit sometime this year. Shares of MO managed to hit a new high of $88.58 but closed off its best levels of the session. It might pay off to wait a day or two and see if MO will dip back toward the 10-dma before initiating new bullish positions. 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: + 0.47
Earnings Date 01/31/07 (unconfirmed)
Average Daily Volume = 8.8 million

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Reynolds American - RAI - cls: 64.07 chg: -0.58 stop: 64.90

RAI is still under performing its rival MO. The stock has recently broken down under its 50-dma and is flirting with a break under its 100-dma. 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: 61.87 change: +0.30 stop: 59.65

SEPR did produce a 0.4% bounce today but traders should remain cautious with the lack of strength. We were expecting more follow through on last week's late rebound but the stock is struggling with the $62 level. 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: - 0.02
Earnings Date 01/27/07 (unconfirmed)
Average Daily Volume = 2.2 million
 

Put Updates

Cummins Inc. - CMI - close: 117.26 change: +1.26 stop: 118.15

CMI produced a 1% bounce from technical support near its 200-dma and its two-year trendline of support. We're waiting for a breakdown under that trendline with our suggested 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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eBay Inc. - EBAY - close: 29.75 change: +0.05 stop: 32.01

Shares of EBAY failed to truly bounce with the rest of the Internet sector. The stock tried and failed to rally past the $30.00 level and its 100-dma. This looks like another entry point to buy puts. Our target is the $26.00 level. We would aim lower but the company has earnings coming up in about two and a half weeks and we do not want to hold over the report.

Picked on January 08 at $ 29.70
Change since picked: + 0.05
Earnings Date 01/24/07 (confirmed)
Average Daily Volume = 14.5 million

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3M Co. - MMM - close: 77.68 change: +0.09 stop: 80.01

MMM is still trading in limbo. The stock has been consolidating sideways with a bearish pattern of lower highs. The next move should be lower but MMM refuses to fall. We're beginning to think that it may be time to exit early and just move on to another play. More conservative traders might want to bail out now. We would hesitate on opening 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: - 0.63
Earnings Date 01/30/07 (confirmed)
Average Daily Volume = 2.8 million

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Sears Holding - SHLD - cls: 166.23 chg: +0.90 stop: 171.55

The retail sector was beginning to rebound today as investors took the plunging oil prices to mean the consumer will be free to spend more. SHLD rose 0.5% but failed to breakout over its 10-dma. The stock is trading between its 10-dma and 100-dma. The trend is down but a strongly positive day for the markets could easily push SHLD towards the $170 level. Be patient if you're looking for a new entry point and consider a failed rally in the $168-170 region as a potential entry. The Point & Figure chart points to a $152 target. Our target is the $162.00-160.00 range.

Picked on December 22 at $167.90
Change since picked: - 1.67
Earnings Date 02/15/07 (unconfirmed)
Average Daily Volume = 1.9 million

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Vornado Realty Trust - VNO - cls: 119.90 chg: +1.76 stop: 122.65

VNO produced a 1.4% oversold bounce today but failed to close over potential resistance at the $120 level and its 50-dma. A decline from here (under $119.50 or $119.00) could be used as a new entry point to buy puts. More conservative traders may want to consider tightening their stops toward $122.00 or $121.50. 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: + 0.35
Earnings Date 02/27/07 (unconfirmed)
Average Daily Volume = 945 thousand

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YUM Brands - YUM - close: 58.27 change: +0.22 stop: 60.26

The tug-of-war between the bulls and the bears in YUM continues. The stock failed to see any further follow through lower but neither did it see much of a rebound. The technical indicators are mixed with both bullish and bearish signals following its three-week trading range. Readers may want to wait for a new relative low before initiating new positions. 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: - 0.22
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: 37.98 chg: -1.30 stop: n/a

After days of gains NILE finally hit some profit taking. We do not see any changes from our previous updates. We're not suggesting new positions. We are adjusting our target to breakeven at $2.40. 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: - 0.94
Earnings Date 10/30/06 (confirmed)
Average Daily Volume = 226 thousand
 

Dropped Calls

None
 

Dropped Puts

Group 1 Auto - GPI - close: 52.52 change: +2.79 stop: 52.01

We have been stopped out of GPI at $52.01. This morning before the opening bell the stock was upgraded to an "out perform" and the market overreacted (or maybe it was just the shorts) and shares rallied to an intraday high of $53.62 above its 200-dma. This was essentially a case of bad luck with yesterday's gap down opening the play and today's upgrade-induced spike higher whipsawing us out of the play.

Picked on January 08 at $ 48.82 *gap down entry*
Change since picked: + 3.70
Earnings Date 02/19/07 (unconfirmed)
Average Daily Volume = 371 thousand

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NewMarket - NEU - close: 56.51 change: +0.89 stop: 60.35

Target achieved. NEU dipped to $54.96 before bouncing from technical support at its rising 200-dma. Our target was the $55.00-54.75 range.

Picked on December 14 at $ 59.11
Change since picked: - 2.60
Earnings Date 01/29/07 (unconfirmed)
Average Daily Volume = 275 thousand
 

Dropped Strangles

None
 

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