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Call Updates

Goldman Sachs - GS - close: 211.88 chg: +3.77 stop: 199.75

The rally in broker-dealer stocks continued on Thursday. The XBD index rose 1.65% to close at another new high. Shares of GS helped lead the way with a 1.8% gain and its own new high on strong (bullish) volume. GS got a boost after one analyst firm upgraded their price target on GS to $242 a share. We do not see any changes from our previous comments. Our target is the $214.00-215.00 range but more aggressive traders may want to aim higher.

Picked on January 10 at $208.11
Change since picked: + 3.77
Earnings Date 03/13/07 (unconfirmed)
Average Daily Volume = 4.7 million

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Lehman Brothers - LEH - cls: 81.11 change: +1.56 stop: 75.99

Lehman Brothers participated in the broker rally with a 1.9% gain on strong, bullish volume today. Shares of LEH broke out over resistance at the $80.00 level. Our suggested trigger to buy calls was at $80.25 so the play is now open. We have two targets. Our conservative target is the $84.85-85.00 range. Our aggressive target is the $89.00-90.00 range. We do have a relatively wide stop loss for this play. LEH's Point & Figure chart shows a very bullish pattern called a bullish triangle breakout that points to a $111 target.

Picked on January 11 at $ 80.25
Change since picked: + 0.86
Earnings Date 03/15/07 (unconfirmed)
Average Daily Volume = 3.4 million

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Lockheed Martin - LMT - cls: 95.66 change: +1.08 stop: 89.75

LMT is still showing relative strength. The stock rose another 1.1% and closed at a new all-time high on improving volume. The close over potential resistance at $95.00 is a good sign. 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: + 5.04
Earnings Date 01/23/07 (unconfirmed)
Average Daily Volume = 2.1 million

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Merrill Lynch - MER - close: 96.28 change: +1.84 stop: 91.25

MER enjoyed a strong session on Thursday posting a 1.9% gain, which was better than the XBD index's 1.65% rally. Furthermore MER managed to close over potential round-number resistance at the $95.00 level and did so on very strong, bullish volume. We do not see any changes from our previous comments. MER is a more aggressive play because we have a very limited time frame. The company is due to report earnings on January 18th before the opening bell. That gives us about one week. Aggressive traders can put their stop under support and the 50-dma near $90.00. We're going to place our stop at $91.25 and more conservative traders may want to put theirs closer to $92.00. Conservative types may also want to wait for a rally past $95 before opening positions. Our target is the $99.50-100.00 range. We do not want to hold over the January 18th earnings report.

Picked on January 10 at $ 94.44
Change since picked: + 1.84
Earnings Date 01/18/07 (confirmed)
Average Daily Volume = 4.6 million

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Altria Group - MO - close: 89.40 change: +0.21 stop: 84.75

Warning! MO may have hit a new all-time high today but the action looks bearish. The intraday high was $90.50 but MO failed to hold most of its gains and the move looks like a failed rally/short-term bearish reversal. We would expect a dip back toward $88.00 or its 10-dma near $87.40. We are targeting a rally into the $92.50-95.00 range. 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: + 1.75
Earnings Date 01/31/07 (unconfirmed)
Average Daily Volume = 8.8 million

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Reynolds American - RAI - cls: 65.01 chg: +0.46 stop: 64.90

We are still on the sidelines waiting for RAI to breakout over resistance in the $66.00-66.50 range. At least the stock is trying to move higher although we note that shares closed off the best levels of the session much like shares of MO. 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.

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: 61.72 change: -0.31 stop: 59.99*new*

We are still concerned about SEPR's lack of upward momentum. Last night biotech giant Genentech (DNA) reported better than expected earnings news and guided higher. This helped fuel the fire in the BTK biotech index. Yet shares of SEPR failed to participate in the rally. We're inching up our stop loss to $59.99. If SEPR does not move higher tomorrow we will close the play early and drop the stock in the weekend newsletter.

Picked on January 07 at $ 61.89
Change since picked: - 0.17
Earnings Date 01/31/07 (confirmed)
Average Daily Volume = 2.2 million
 

Put Updates

Cummins Inc. - CMI - close: 115.88 change: +1.58 stop: 118.15

CMI is still trying to bounce and the stock rose 1.3% but shares remain under their 200-dma and under its bearish trend of lower highs. Look for a failed rally under $117.50 (also near the 10-dma) as a potential entry point. 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 10 at $114.50
Change since picked: + 1.38
Earnings Date 01/29/07 (unconfirmed)
Average Daily Volume = 1.0 million

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eBay Inc. - EBAY - close: 30.23 change: +0.93 stop: 32.01

A price target upgrade for GOOG helped fuel the fire for Internet stocks. Meanwhile the market seemed generally positive on EBAY's news last night that they had signed an agreement to purchase StubHub for $310 million. The rebound back above the $30.00 level is a danger sign for the bears but so far EBAY is still under its 200-dma and its trend of lower highs (for now). More conservative traders may want to exit early to limit any losses. We're not suggesting new positions here - wait for a new relative low instead. Remember that we do not want to hold over EBAY's upcoming earnings report. Our target is the $26.00 level.

Picked on January 08 at $ 29.70
Change since picked: + 0.53
Earnings Date 01/24/07 (confirmed)
Average Daily Volume = 14.5 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: 39.43 chg: +0.94 stop: n/a

NILE continues to rally but we're quickly running out of time. January options expire in about six trading days. We do not see any changes from our previous updates on NILE. We're not suggesting new positions. We have adjusted 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: + 0.51
Earnings Date 10/30/06 (confirmed)
Average Daily Volume = 226 thousand
 

Dropped Calls

SanDisk - SNDK - close: 43.80 change: -1.90 stop: 42.45

Abandon ship!!! Not only did SNDK fail to participate in the technology sector rally but shares reversed yesterday's bullish breakout and did so on strong volume. This is a bearish reversal and we're suggesting an immediate exit.

Picked on January 10 at $ 45.70
Change since picked: - 1.90
Earnings Date 01/30/07 (confirmed)
Average Daily Volume = 10.9 million
 

Dropped Puts

3M Co. - MMM - close: 78.65 change: +0.80 stop: 79.05

We are suggesting an early exit in MMM. The market's strength has pushed MMM above its bearish trend of lower highs. We're exiting early to cut our losses to a minimum.

Picked on December 17 at $ 78.31
Change since picked: + 0.34
Earnings Date 01/30/07 (confirmed)
Average Daily Volume = 2.8 million

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Vornado Realty Trust - VNO - cls: 122.74 chg: +1.19 stop: 122.65

We have been stopped out of VNO at $122.65. Another strong day for the markets was too much and VNO posted its third gain in a row. We warned readers yesterday that VNO look poised to continue higher. Rumors that VNO might try and compete with the buyout offer for EOP did not stop the stock from trading higher.

Picked on January 07 at $119.55
Change since picked: + 3.19
Earnings Date 02/27/07 (unconfirmed)
Average Daily Volume = 945 thousand

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YUM Brands - YUM - close: 60.00 change: +1.18 stop: 60.05

We have been stopped out of YUM at $60.05. The market's strength helped YUM rally toward resistance at $60.00 and its 50-dma. Unfortunately, shares traded to an intraday high of $60.11.

Picked on December 12 at $ 58.49
Change since picked: + 1.51
Earnings Date 02/07/07 (unconfirmed)
Average Daily Volume = 1.6 million
 

Dropped Strangles

None
 

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