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Call Updates

Burlington Nor.SantaFe - BNI - cls: 81.42 chg: -0.05 stop: 77.99

The Dow Transportation average touched a new all-time high at 5032 and closed at a new high at 5006 on Friday. While this is great news the $TRAN average only rose 0.16% on the session. The rally in the railroad index also took a rest and the transports look short-term overbought and due for a dip after last week's big surge. Shares of BNI traded near Thursday's high again before slipped lower throughout the remainder of the session. This looks like a possible short-term top and we would expect a consolidation back towards $80.00 and/or its simple 10-dma currently near $79.16. A dip or bounce in the $79.00-80.00 region can be used as a new bullish entry point on BNI. We would prefer to buy a dip but if we don't see a dip consider buying calls on a breakout past $82.60. Our target is the $87.00-87.50 range. The Point & Figure chart points to $100 and BNI's inverse H&S pattern also suggests a $100 target. FYI: We continue to read positive analysis of the railroads and how they will benefit from rising demand for coal and ethanol. Of course these are going to be long-term influences for the railroad industry and may not act as short-term drivers.

Suggested Options:
We are suggesting the March calls on BNI.

BUY CALL MAR 80.00 BNI-CP open interest=4243 current ask $3.70
BUY CALL MAR 85.00 BNI-CQ open interest=4817 current ask $1.35

Picked on February 1 at $ 82.01
Change since picked: - 0.59
Earnings Date 01/23/07 (confirmed)
Average Daily Volume = 2.4 million

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Macerich - MAC - close: 96.60 change: +0.32 stop: 91.95

MAC continues to rally but it looks like the air is getting harder to breathe at this altitude at least without a rest. The stock is up eight days in a row so it's probably time for a dip. We would expect a dip towards $95.00 or lower towards the simple 10-dma near $93.75. MAC is relatively close to our target in the $98.00-100.00 range so we're not suggesting new positions although readers might want to consider jumping in on a bounce near the 10-dma. This remains an aggressive, higher-risk play. We do not want to hold over the February 13th earnings report.

Suggested Options:
We are not suggesting new positions in MAC.

Picked on January 28 at $ 93.46
Change since picked: + 3.14
Earnings Date 02/13/07 (confirmed)
Average Daily Volume = 436 thousand

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OM Group - OMG - close: 49.66 change: -0.48 stop: 45.75

The past couple of weeks have been relatively strong for OMG. In spite of rising crude oil, which is usually a big cost for chemical producers, shares of OMG have broken out from their early January consolidation and the bearish trendline of lower highs. Right now the stock looks ready to dip back towards the 10-dma and 100-dma near $48.00. We would use a dip or a bounce near $48 as a new entry point to buy calls. If you study the chart OMG might have some resistance in the $51.50-52.00 region but the P&F chart points to a $57 target. We are aiming for the $54.00-55.00 range. We do not want to hold over the early March earnings.

Suggested Options:
If OMG dips toward short-term support we would suggest the March calls. Plan to exit ahead of the early March earnings.

BUY CALL MAR 45.00 OMG-CI open interest=2590 current ask $6.60
BUY CALL MAR 50.00 OMG-CJ open interest=3849 current ask $3.60
BUY CALL MAR 55.00 OMG-CK open interest= 870 current ask $1.70

Picked on January 25 at $ 48.05
Change since picked: + 1.61
Earnings Date 03/02/07 (unconfirmed)
Average Daily Volume = 770 thousand

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RTI Int. - RTI - close: 82.56 change: -1.23 stop: 76.75

It looks like most of the steel-related stocks all spiked lower at the open on Friday. Most of these stocks saw traders buy the dip within the first thirty minutes. We remain bullish on RTI and would consider new positions right here. However, if you have any patience then consider waiting for another dip closer to the $80.00 level, which as broken resistance should now act as new support. This past week was very bullish for RTI with a significant breakout past the $80 level. The P&F chart points to a $105 target. Our target is the $88.00-90.00 range.

Suggested Options:
We are suggesting the March calls. Please note that we want to exit ahead of the mid March earnings report.

BUY CALL MAR 80.00 RTI-CP open interest=926 current ask $7.00
BUY CALL MAR 85.00 RTI-CQ open interest=898 current ask $4.50

Picked on January 31 at $ 81.75
Change since picked: + 0.81
Earnings Date 03/12/07 (unconfirmed)
Average Daily Volume = 737 thousand

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Teleflex - TFX - close: 67.79 chg: +0.19 stop: 64.75

Last week was bullish for TFX. The stock bounced from support near $65 and its 50-dma to post a 3.9% gain for the week. Short-term technicals are turning bullish again. Unfortunately, we remain concerned by the lack of volume on the move, which suggests a lack of real conviction. We suspect that TFX is poised to dip back toward $66.50-67.00. If you're looking for a new bullish entry point wait and watch for a dip or a bounce above $66.00. Our target is the $71.00-72.00 range. The P&F chart points to an $81 target. We plan to exit ahead of the mid February earnings report. FYI: We cannot find a confirmed earnings date and it looks like TFX is due to report in the February 14th-27th range. More conservative traders may not want to open plays with a potential earnings announcement just seven trading days away.

Suggested Options:
If you are looking to open new plays in TFX we'd suggest the March or April calls.

Picked on January 14 at $ 67.11
Change since picked: + 0.49
Earnings Date 02/14/07 (unconfirmed)
Average Daily Volume = 202 thousand
 

Put Updates

F5 Networks - FFIV - close: 71.81 change: +0.40 stop: 76.25

It is challenging to find a good put candidate with the major market indices hitting new highs. Fortunately, thus far, FFIV has been showing relative weakness. That could change on Tuesday. Networking giant Cisco Systems (CSCO) is due to report earnings on February 6th after the closing bell. CSCO's results and guidance could have a big influence on shares of FFIV. More conservative traders may want to tighten their stops ahead of CSCO's report. If you look at the chart for FFIV you can see how the simple 10-dma continues to act as short-term overhead resistance, which is a positive for the bears. We are not suggesting new positions at this time unless FFIV can breakdown under $70.00. A 38.2% Fibonacci retracement of the August-January run would be very close to $65.00 so we are aiming for the $66.00-65.00 range. Traders should be aware that the rising 100-dma near $67 might offer some support. FYI: The Point & Figure chart has produced a triple-bottom breakdown sell signal with a $63 target. Plus, the company recently announced an analyst meeting for February 7th in New York.

Suggested Options:
We are not suggesting new positions in FFIV at this time. See play update for details.

Picked on January 28 at $ 72.70
Change since picked: - 0.89
Earnings Date 01/24/07 (confirmed)
Average Daily Volume = 1.0 million

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Whole Foods - WFMI - close: 44.67 chg: +0.70 stop: 45.51

After six weeks of declines the bulls are making a comeback in WFMI. The stock rebounded 5% for the week and has broken out past short-term technical resistance at the 10-dma and is now challenging resistance near $45.00 and its six-week trendline of resistance (lower highs). More conservative traders may want to tighten their stops more closely toward the $45.00 level. At this point we'd wait for a decline under Friday's low near $43.85 before considering new positions. Our target is the $40.25-40.00 range compared to the P&F chart, which points to a $26 target. FYI: There appears to be some confusion over WFMI's upcoming earnings announcement date. We checked two different sources and one says WFMI will report on February 13th after the market's close. The other source says WFMI will report on February 21st after the market's close. Both sources have labeled this a confirmed earnings date. Obviously someone is wrong or it's a typo. We are going to play off the February 13th date and plan to exit on February 12th assuming WFMI doesn't stop us out or hit our target.

Suggested Options:
If WFMI produces a failed rally from here we'd suggest the March puts. However, traders should note that we only have six trading days left before earnings.

Picked on January 19 at $ 44.85
Change since picked: - 0.18
Earnings Date 02/13/07 (confirmed)
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: 481.50 change: -0.25 stop: n/a

GOOG's lack of follow through lower after Thursday's big sell-off and bearish reversal candlestick is not the greatest sign for the bears or our strangle play. The stock barely moved as it oscillated on either side of $480. Technically the trend is bearish with the double-top and the recent breakdown. More conservative traders may want to exit early right now. We're going to stick it out for a couple of more days and re-evaluate. We are not suggesting new strangle positions. In our original play description 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.

Suggested Options:
We are not suggesting new strangle plays on GOOG.

Picked on January 28 at $495.84
Change since picked: -14.34
Earnings Date 01/31/07 (confirmed)
Average Daily Volume = 5.2 million

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United Parcel Srv. - UPS - cls: 74.17 chg: +0.53 stop: n/a

UPS investors continue to ignore the company's bearish earnings report from last week and the transport stocks continue to ignore the rising price of crude oil. Instead traders are choosing to focus on the optimistic outlook for the growing economy, which should be fundamentally bullish for UPS. Shares of UPS are at a pivotal spot where we should see a bullish breakout over resistance or a failed rally. We are not suggesting new strangle positions at this time. February options expire in two weeks and considering UPS' failure to move on its earnings report more conservative traders may want to adjust their targets to break even. Our estimated cost was $1.65. We suggested the February $75 call (UPS-BO) and the February $70 put (UPS-NN).

Suggested Options:
We are not suggesting new positions in UPS.

Picked on January 28 at $ 72.49
Change since picked: + 1.68
Earnings Date 01/30/07 (confirmed)
Average Daily Volume = 2.9 million
 

Dropped Calls

None
 

Dropped Puts

None
 

Dropped Strangles

None
 

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