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Call Updates

Alexandria RealEst. - ARE - cls: 106.79 chg: +0.85 stop: 101.99

ARE continues to show relative strength. The stock rose another 0.8% and set another new all-time high in spite of some pockets of weakness in the REITs. We do not see any changes from our previous updates. If you're looking for a new entry point consider waiting for a dip (or a bounce) near $104.00-105.00. Our target is the $109.90-110.00 range. More aggressive traders may want to aim higher but we have a limited time frame. ARE is due to report earnings (unconfirmed) on February 8th. We do not want to hold over the report.

Picked on January 29 at $105.51
Change since picked: + 1.28
Earnings Date 02/08/07 (unconfirmed)
Average Daily Volume = 213 thousand

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KB Home - KBH - close: 51.67 change: +0.02 stop: 49.99

The homebuilding sector barely budged today. Shares of KBH followed suit and closed virtually unchanged. Investors are probably waiting to hear the FOMC's decision on interest due out tomorrow afternoon. Thus, tomorrow is likely to be sideways at least until the Fed decision is released. Given the SEC news from last week more conservative traders may want to exit early right here! We are not suggesting new bullish positions at this time but more aggressive traders may want to consider buying a bounce from here. Our target is the $54.90-55.00 range.

Picked on January 21 at $ 51.74
Change since picked: - 0.07
Earnings Date 03/19/07 (unconfirmed)
Average Daily Volume = 2.2 million

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Macerich - MAC - close: 94.80 change: +0.99 stop: 89.95

MAC is another REIT that is showing plenty of relative strength. The stock rose another 1% to close at another all-time high. Today's breakout past the $94.00 level is a bullish move! If you are looking for a new entry point consider waiting for a dip back toward the $94.00-93.50 region. MAC is definitely overbought and that makes this an aggressive, higher-risk momentum play. Our target is the $98.00-100.00 range. We do not want to hold over the February 13th earnings report.

Picked on January 28 at $ 93.46
Change since picked: + 1.34
Earnings Date 02/13/07 (confirmed)
Average Daily Volume = 436 thousand

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Mohawk Ind. - MHK - close: 78.20 chg: -0.82 stop: 77.45

Warning! MHK displayed relative weakness on Tuesday with a 1% decline and a bearish engulfing candlestick pattern. Technical indicators are turning bearish and the stock closed right on its four-week trendline of support. More conservative traders may want to exit immediately or tighten your stop toward $77.75 or $77.95. At this point in the game, if MHK bounces tomorrow, we'd wait for a new trade over $80.00 or a new relative high before considering new bullish positions. Our target is the $84.00-85.00 range. We do not want to hold over the February earnings report.

Picked on January 21 at $ 78.38
Change since picked: - 0.18
Earnings Date 02/16/07 (confirmed)
Average Daily Volume = 557 thousand

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Marathon Oil - MRO - close: 89.31 change: +2.11 stop: 86.99*new*

Wow! What a difference a day can make. Crude oil produced one of its biggest one day gains in years and closed near $57 a barrel. This lifted the energy sector and shares of MRO closed up with a 2.4% gain. Unfortunately, volume on today's move was lacking and we're almost out of time. We are planning to exit tomorrow at the closing bell to avoid holding over the February 1st earnings report. Please note that we're inching up the stop loss to $86.99.

Picked on January 22 at $ 88.05
Change since picked: + 1.26
Earnings Date 02/01/07 (confirmed)
Average Daily Volume = 3.7 million

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OM Group - OMG - close: 48.40 change: +0.19 stop: 43.89

OMG continues to inch higher. We do not see any significant changes from our previous comments. Readers can choose to buy calls now or wait for a potential dip into the $47.50-47.00 region as a new entry point. Our target is the $54.00-55.00 range. We do not want to hold over the early March earnings. FYI: The P&F chart points to a $57 target.

Picked on January 25 at $ 48.05
Change since picked: + 0.35
Earnings Date 03/02/07 (unconfirmed)
Average Daily Volume = 770 thousand

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Teleflex - TFX - close: 65.70 chg: +0.23 stop: 64.75

It looks like TFX is trying to bounce. Early this afternoon traders bought the dip near $65.00 again. The stock remains under potential resistance at its 10-dma and its short-term trendline of lower highs. We are not suggesting new bullish positions until we see TFX break its short-term trend of lower highs. Our target is the $71.00-72.00 range. FYI: The P&F chart points to an $81 target. We plan to exit ahead of the mid February earnings report.

Picked on January 14 at $ 67.11
Change since picked: - 1.41
Earnings Date 02/14/07 (unconfirmed)
Average Daily Volume = 202 thousand
 

Put Updates

Celgene Corp. - CELG - close: 54.25 chg: +0.66 stop: 55.01 *new*

CELG produced a 1.2% bounce on Tuesday but the stock remains under short-term resistance at its simple 10-dma and its multi-week trendline of lower highs (resistance). The company reports earnings on Thursday so we plan to exit tomorrow at the closing bell. Please note that we're adjusting the stop loss to $55.01.

Picked on January 18 at $ 54.98
Change since picked: - 0.73
Earnings Date 02/01/07 (confirmed)
Average Daily Volume = 4.4 million

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F5 Networks - FFIV - close: 72.90 change: +0.69 stop: 76.25

Energy stocks may have been today's best performers but the networking sector turned in a decent bounce. The NWX networking index closed up 0.7%. Shares of FFIV out performed most of its peers with a 0.9% oversold bounce. Volume on today's rebound for FFIV was pretty low so it's hard to put much conviction behind the move. We would watch for a failed rally under its 10-dma or the 50-dma as a new entry point to buy puts. That is essentially the $74.00-75.00 range. More conservative traders may want to wait for more confirmation and only buy puts on a break down under $70.00. A 38.2% Fibonacci retracement would be very close to $65.00 and FFIV's rising 100-dma so we are aiming for the $66.00-65.00 range. FYI: The Point & Figure chart has produced a triple-bottom breakdown sell signal with a $63 target.

Picked on January 28 at $ 72.70
Change since picked: + 0.20
Earnings Date 01/24/07 (confirmed)
Average Daily Volume = 1.0 million

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Ralph Lauren/Polo - RL - cls: 80.40 change: +0.07 stop: 82.05

It looks like the big rally in crude oil today squashed any rebound in the retailers. The RLX retail index barely moved and shares of RL closed almost unchanged. If you want to get nit-picky the trading in RL today almost looks like a failed rally under its 10-dma, which would make it a new entry point. We would wait for a new drop under $79.50 or $79.39 before considering new put positions. More conservative traders may want more confirmation and can look for a drop under $77.50 before opening plays. Our target is the $73.00-72.50 range but traders may want to exit at the rising 100-dma. We do not want to hold over the February 7th earnings report and that gives us seven trading days. FYI: The P&F chart is still bullish (for now).

Picked on January 28 at $ 78.80
Change since picked: + 1.60
Earnings Date 02/07/07 (confirmed)
Average Daily Volume = 726 thousand

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Whole Foods - WFMI - close: 44.37 chg: +1.12 stop: 45.51

The oversold bounce from Monday continued into Tuesday's session. Shares of WFMI rose 2.58% and managed to breakout back above its simple 10-dma. The stock is now facing overhead resistance near the $45.00 level. A failed rally under $45.00 can be used as a new entry point to buy puts. Our target is the $40.25-40.00 range. We do not want to hold over the February earnings report. FYI: The P&F chart points to a $26 target.

Picked on January 19 at $ 44.85
Change since picked: - 0.48
Earnings Date 02/21/07 (unconfirmed)
Average Daily Volume = 3.3 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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Google - GOOG - cls: 494.32 change: +1.85 stop: n/a

GOOG traded near $498.00 for the third time in three days. This is relatively good news since it provided an attractive entry point to open new strangle positions ahead of the company's earnings report. Tomorrow is our last day to open any positions ahead of GOOG's earnings. The company reports after the closing bell on Wednesday. Wall Street expects GOOG to report a profit of $2.91 a share. Our suggested entry range is the $490-510 range and the closer to $500.00 the better. This is not for the faint of heart and options can be expensive so we consider this an aggressive, higher-risk trade. In the Sunday newsletter we suggested two different potential strangle strategies. One involved the February $530 call (GOP-BW) and the February $470 put (GOP-NG). This strategy had an estimated cost of $17.40 and we want to exit if either option rises to $29.00 or more. The second strangle strategy involved the February $550 call (GOP-BY) and the February $450 put (GOP-NJ). This second strategy had an estimated cost of $8.70 and we want to sell if either option rises to $16.00 or more. Editor's note: Many times the biggest move in GOOG is on the first day after earnings but it might pay off to hold the strangle position for two or three days to capture the largest chunk of any post earnings news. If after three days following the earnings report and the options have not hit our target we'll probably exit.

Picked on January 28 at $495.84
Change since picked: - 1.52
Earnings Date 01/31/07 (confirmed)
Average Daily Volume = 5.2 million

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Intuitive Surgical - ISRG - cls: 98.20 chg: +0.68 stop: n/a

Shares of ISRG dipped back to an intraday low of $95.44 before bouncing again. This intraday dip provided another great entry point to open any strangle plays ahead of the company's earnings report. We have two days left to consider new positions since ISRG doesn't announce earnings until after the closing bell on February 1st. We are suggesting that readers open strangle positions in the $92.50-97.50 range but the closer to $95.00 the better. Our suggested strangle involves the February $100 call (AXQ-BT) and the February $90 put (AXQ-NR). Our estimated cost was $7.20 and we want to sell if either option rises to $14.80 or more.

Picked on January 28 at $ 94.98
Change since picked: + 3.22
Earnings Date 02/01/07 (confirmed)
Average Daily Volume = 882 thousand

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United Parcel Srv. - UPS - cls: 72.70 chg: -0.95 stop: n/a

Shares of UPS held up relatively well considering the earnings news today. The company reported earnings that were in-line with expectations but gave a slightly bearish forecast for 2007. The market reacted with a gap down to open at $71.17 and an intraday low of $70.38 before UPS bounced back to close with a 1.2% decline. The rebound was a surprise given the huge move in crude oil today. We are going to need to see a much bigger move in UPS if our strangle play is going to be profitable. We suggested the February $75 call (UPS-BO) and the February $70 put (UPS-NN). Our estimated cost was $1.65. We want to exit if either option rises to $3.75 or more. FYI: We are no longer suggesting new positions.

Picked on January 28 at $ 72.49
Change since picked: + 0.21
Earnings Date 01/30/07 (confirmed)
Average Daily Volume = 2.9 million
 

Dropped Calls

Altria Group - MO - close: 87.54 change: -0.52 stop: 86.85

Our time is up on the bullish play in MO. The company is due to report earnings tomorrow morning. Wall Street expects a profit of $1.22 a share. It was our plan to exit today at the closing bell to avoid holding over the announcement. It is widely expected that MO will announce plans to spin-off its Kraft (KFT) division. While there might be a pop on the news odds are good the news is already baked into the stock price.

Picked on January 04 at $ 87.65
Change since picked: - 0.11
Earnings Date 01/31/07 (confirmed)
Average Daily Volume = 8.8 million
 

Dropped Puts

None
 

Dropped Strangles

None
 

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