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Call Updates

Chaparral Steel - CHAP - cls: 44.47 chg: -0.69 stop: 41.99

A weaker than expected manufacturing number during this morning's economic report may have prompted some profit taking in CHAP. The good news is that traders began to step in this afternoon and buy the dip near $44.00. We see the pull back as a new entry point to buy calls although more conservative traders might want to wait for a rally past $45.00 to confirm the bounce. Our target is the $49.00-50.00 range.

Picked on January 14 at $ 45.16
Change since picked: - 0.69
Earnings Date 03/20/07 (unconfirmed)
Average Daily Volume = 635 thousand


iShares China Index - FXI - close: 107.39 chg: +1.99 stop: 99.49

We warned you that FXI was going to gap open every day. The Chinese-focused ETF opened at $107.45 following a strong couple of days in the Chinese markets. Readers can choose to look for a dip back near $105.00 or wait for a rally past the simple 10-dma (near $108.00). We do have a wide stop loss. More conservative traders may want to use a tighter stop. Our target is the $115.00-117.00 range.

Picked on January 14 at $105.40
Change since picked: + 1.99
Earnings Date 00/00/00 (unconfirmed)
Average Daily Volume = 1.3 million


Lehman Brothers - LEH - cls: 82.53 change: -0.21 stop: 77.99

We need to issue a cautionary warning on the broker-dealers. This sector was a big leader last week. Today's (Tuesday) session saw the XBD index produce a failed rally under the 260 level. This looks like a short-term top and a prelude to some profit taking. Readers may want to step back and watch for a dip into the $80.00-81.00 region before considering new call positions on LEH. We have two targets. Our conservative target is the $84.85-85.00 range. Our aggressive target is the $89.00-90.00 range. 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: + 2.28
Earnings Date 03/15/07 (unconfirmed)
Average Daily Volume = 3.4 million


China Life Ins. - LFC - close: 48.90 change: +2.04 stop: 43.95

The U.S. markets were closed on Monday but that didn't stop the Chinese stock market from surging higher. Shares of LFC gapped open higher on Tuesday in a reaction to stock strength back home. Readers can choose to buy the rally, wait for a dip back into the $46.00-47.00 region or watch for a breakout over its simple 10-dma near $50.00 as a new entry point. It really depends on your trading style. Remember, LFC is a more aggressive, higher-risk play and will tend to gap open every day. Our target is the $52.50-55.00 range.

Picked on January 14 at $ 46.86
Change since picked: + 2.04
Earnings Date 04/18/07 (unconfirmed)
Average Daily Volume = 1.7 million


Lockheed Martin - LMT - cls: 97.00 change: +0.69 stop: 90.95

Shares of LMT continue to show relative strength by posting their fifth gain out of the last six sessions. LMT closed at another new high in spite of news out on Monday that the Navy has ordered the company to stop working on a $200 million ship project. LMT is nearing our target in the $99.00-100.00 range so we're not suggesting new positions. The stock has already hit our conservative target in the $94.85-95.00 range last week. More conservative traders may want to lock in a gain right now.

Picked on November 29 at $ 90.62
Change since picked: + 6.38
Earnings Date 01/23/07 (unconfirmed)
Average Daily Volume = 2.1 million


Merrill Lynch - MER - close: 96.86 change: -0.16 stop: 93.99

MER suffered the same slow down that LEH did today. The XBD broker-dealer index appeared to produce a failed rally on Tuesday. We would caution traders to expect some profit taking. Normally, we'd suggest being ready to buy the dip but we have to exit soon. MER should find some support at $94.00, its 10-dma or the $95.00 level. Our target is the $99.50-100.00 range. We do not want to hold over the January 18th earnings report so we plan to exit on Wednesday the 17th at the closing bell if MER has not hit our target by then. We are not suggesting new positions in MER at this time. Please note that we're raising the stop loss to $93.99.

Picked on January 10 at $ 94.44
Change since picked: + 2.42
Earnings Date 01/18/07 (confirmed)
Average Daily Volume = 4.6 million


Altria Group - MO - close: 89.29 change: +0.87 stop: 84.75

MO bounced for a 0.98% gain as traders stepped in to buy the dip near its rising 10-dma. We do not see any significant changes from our weekend comments. We're not suggesting new positions in MO at this time. More conservative traders might want to consider a tighter stop loss near $86. 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: + 1.64
Earnings Date 01/31/07 (unconfirmed)
Average Daily Volume = 8.8 million


Teleflex - TFX - close: 67.15 chg: +0.04 stop: 64.75

TFX did not make much progress on Tuesday. We expected more of a follow through after Friday's bullish breakout. We would still consider new call positions here but it might pay to wait and look for a dip back toward the $66.00 region. More aggressive traders may want to put their stop under the 50-dma. Normally we would expect the $70.00 level to act as resistance but looking at TFX's history the stock seems to encounter resistance in the $72.00 region. Our target will be the $71.00-72.00 range.

Picked on January 14 at $ 67.11
Change since picked: + 0.04
Earnings Date 02/14/07 (unconfirmed)
Average Daily Volume = 202 thousand

Put Updates

eBay Inc. - EBAY - close: 30.04 change: +0.04 stop: 31.26

Thankfully shares of EBAY continue to under perform. The stock barely moved today and remains under technical resistance at its 200-dma. Even with EBAY's relative weakness we hesitate to suggest new put positions given our time frame and the market's strength. The company is due to report earnings on January 24th and we do not want to hold over the announcement. Please note that we're adjusting our stop loss to $31.26. Our target is the $26.00 level.

Picked on January 08 at $ 29.70
Change since picked: + 0.34
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.)


Blue Nile - NILE - cls: 38.65 chg: -0.26 stop: n/a

We do not see any changes from our weekend update on NILE. Time is quickly running out. We're not suggesting new positions. We have adjusted our target to $1.20, which is half of 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: - 0.27
Earnings Date 10/30/06 (confirmed)
Average Daily Volume = 226 thousand

Dropped Calls


Dropped Puts

Cummins Inc. - CMI - close: 118.72 change: +1.97 stop: 118.15

We have been stopped out of CMI at $118.15. We suspect that the strong rally in the transports, thanks to another sharp drop in oil and some upgrades in the sector, rubbed off on CMI pushing the stock higher. Today's rally has broken CMI's five-week trendline of lower highs (resistance).

Picked on January 10 at $114.50
Change since picked: + 4.22
Earnings Date 01/29/07 (confirmed)
Average Daily Volume = 1.0 million

Dropped Strangles


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