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Call Updates

Broadcom - BRCM - cls: 36.58 change: -0.34 stop: 33.95

BRCM pierced resistance at the $37.00 level on an intraday basis but couldn't hold it. Shares look like they need to regroup and build up another head of steam to try again. We would expect a dip toward the $36.00 level soon. Meanwhile both BRCM and rival QCOM have seen upward trends the last few weeks but it looks like QCOM is outpacing BRCM. Our BRCM target is the $39.85-40.00 range. The Point & Figure chart is bullish with a $49 target. Please note that we do not want to hold over the mid October earnings report.

Picked on September 12 at $ 35.85
Change since picked: + 0.73
Earnings Date 10/10/07 (unconfirmed)
Average Daily Volume = 11.0 million

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Citigroup - C - clos: 46.55 change: +0.24 stop: 45.65

C is trying to bounce from the $46.00 level. The afternoon spike higher in C on the BSC news (see our BSC update) looked like a new bullish entry point to buy calls on C. Unfortunately, shares of C gave back most of its late afternoon gains with a failed rally near $47. We would stay defensive here. Meanwhile on CNBC today we heard one analyst say he liked C as a bullish candidate but suggested waiting for a pull back after the stock's run up on the Fed's rate hike news. Um... we'd like to let him know that C has already pulled back from its FOMC rate cut spike higher. Considering the stock's relative weakness the past few days readers might want to tighten their stops toward $46.00. Our initial target is the $49.85-50.00 range but we might decide later to add a more aggressive target at the 200-dma. Please note that we do not want to hold over the October 19th earnings report.

Picked on September 16 at $ 46.64
Change since picked: - 0.09
Earnings Date 10/19/07 (confirmed)
Average Daily Volume = 40.7 million

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Ceradyne - CRDN - cls: 76.01 change: +1.50 stop: 71.74

CRDN continues to show relative strength. The stock just broke out to a new two-month high and pushed through potential resistance near $75.00. Our only concern would be the lackluster volume on this rally. We would still consider positions here or on a dip in the $74-75 zone. Our short-term target is the $79.50-80.00 range. The P&F chart is bullish with a $92 target.

Picked on September 25 at $ 74.61
Change since picked: + 1.50
Earnings Date 11/01/07 (unconfirmed)
Average Daily Volume = 653 thousand

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Intl. Bus. Mach.- IBM - cls: 117.30 chg: +0.79 stop: 113.90

IBM is still churning sideways but the action was generally positive today. The stock is struggling with the $118 level overhead. We would not suggest new positions at this time. The stock has already hit our $118-120 target range. Our second, more-aggressive target is the $124.00-125.00 zone. FYI: The Point & Figure is very bullish with a $177 target. We do not want to hold over the mid October earnings report.

Picked on August 26 at $113.24
Change since picked: + 4.06
Earnings Date 10/17/07 (unconfirmed)
Average Daily Volume = 9.5 million

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L-3 Comm. - LLL - cls: 102.47 chg: +1.51 stop: 95.99

LLL is off to a good start. The stock rose 1.49% following yesterday's bullish breakout. Shares are now challenging resistance in the $102.50-103.00 range, which we incorrectly identified yesterday as resistance near $105 with the July and August highs. Today's rally in LLL has produced a new triple-top breakout buy signal on the P&F chart with a $115 target. Our target is the $107.50-110.00 range.

Picked on September 25 at $100.96
Change since picked: + 1.51
Earnings Date 10/25/07 (confirmed)
Average Daily Volume = 904 thousand

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Lockheed - LMT - cls: 105.72 change: +0.76 stop: 98.99

LMT rallied to an intraday high of $107 and is challenging the July all-time high just over $107. LMT's rally might look a little bit tired so don't be surprised to see a dip back toward $104 or its 10-dma around $102. Our target is the $109.50-110.00 range. More aggressive traders may want to aim higher. The P&F chart points to a $117 target. We do not want to hold over the late October earnings.

Picked on September 24 at $103.81 *gapped higher
Change since picked: + 1.91
Earnings Date 10/24/07 (unconfirmed)
Average Daily Volume = 2.7 million

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Stryker - SYK - cls: 67.90 change: +0.23 stop: 65.90

Shares of SYK looked asleep today. The stock barely moved. We're sticking to our plan, which calls for a trigger at $70.65 to open positions. If triggered at $70.65 our target is the $74.90-75.00 range. Given the length of SYK's consolidation we would actually aim higher, maybe the $77.50-80.00 range, but we don't have much time and plan to exit ahead of the mid October earnings report. The P&F chart is bullish with an $83 target.

Picked on September xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 10/17/07 (confirmed)
Average Daily Volume = 1.4 million

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Terex - TEX - cls: 87.73 change: +1.23 stop: 79.99

TEX rose another 1.4% following yesterday's bullish move. Shares continue to look strong and we don't see any changes from our Tuesday comments. The P&F chart is very bullish with a $100 target. We're suggesting bullish call positions now with TEX above $85. There will likely be some resistance near $90 but our target is the $94-95 range.

Picked on September 25 at $ 86.50
Change since picked: + 1.23
Earnings Date 10/25/07 (unconfirmed)
Average Daily Volume = 1.8 million

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Whole Foods - WFMI - cls: 47.97 change: +2.25 stop: 42.49

Thankfully we did not have to wait very long for WFMI to breakout over resistance at the $46.00 level. Contributing to WFMI's rally was some positive analyst comments and an "out perform" rating. The breakout over $46 sparked some short covering and bargain hunting. Our suggested trigger to buy calls was at $46.26 so the play is open. The intraday high today was $48.98. Our first target is the $49.75-50.00 range. Our second target is the $52.50-55.00 zone. We do not want to hold over the early November earnings report. We're suggesting a stop loss at $42.49 but it looks like readers might be able to get away with a stop much closer around $44.00.

Picked on September 26 at $ 46.26
Change since picked: + 1.71
Earnings Date 11/01/07 (unconfirmed)
Average Daily Volume = 3.2 million
 

Put Updates

Alexander & Baldwin - ALEX - cls: 49.06 chg: +0.09 stop: 52.01

The action in ALEX today sort of looks like a bearish failed rally pattern under $50.00, which would be a new entry point for puts. However, before you jump into a new play on ALEX we would probably wait a little while after shares open tomorrow to see how the first hour of trading pans out. We didn't see anything specific in the news today but shares of ALEX were trading higher after hours around $49.50. The P&F chart is already bearish with a $36 target. There is some support near $47.50 but we're aiming for a decline into the $45.50-45.00 range. We do not want to hold over the late October earnings.

Picked on September 23 at $ 49.50
Change since picked: - 0.44
Earnings Date 10/25/07 (unconfirmed)
Average Daily Volume = 337 thousand

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Cephalon - CEPH - cls: 72.45 chg: -0.01 stop: 74.25

Be careful with CEPH. Shares were consolidating sideways above support near $72.00 and the stock suddenly spiked lower to $71.05. Fueling the move was news that the FDA had issued a public health advisory warning on CEPH's cancer pain drug called Fentora. Normally, one might think that when the FDA has to issue a public notice about the risk of fatal overdose that we might see a bigger move in the stock price. Unfortunately, shares of CEPH bounced back and continued sliding sideways above support near $72.00. Our bearish play is now open since the suggested trigger to buy puts was at $71.70 but we would wait for a new decline under $72 before considering new positions. Our target is the $68.00-67.00 range. More aggressive traders could aim for the $65 region. The P&F chart is very bearish with a $50 target.

Picked on September 26 at $ 71.70
Change since picked: + 0.75
Earnings Date 11/01/07 (unconfirmed)
Average Daily Volume = 1.5 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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Dow Jones Industrial Avg. - DJX - cls: 138.78 chg: +0.99 stop: n/a

Wednesday was another bullish day for the DJIA and the DJX but we need to see further gains before this strangle will turn positive. We are not suggesting new positions on the October version of our strangle. The options listed for our October strangle were the October $137 calls (DJY-JG) and the October $132 puts (DJW-VB) with an estimated cost of $4.75. We want to sell if either option hits $6.75.

Picked on September 16 at $134.43
Change since picked: + 4.35
Earnings Date 00/00/00
Average Daily Volume = million
 

Dropped Calls

None
 

Dropped Puts

None
 

Dropped Strangles

Bear Stearns - BSC - cls: 123.00 chg: +8.76 stop: n/a

Target achieved. It was a big day for BSC. The stock was already in rally mode with a rise to the $120 level this morning. The gains had begun to fade and then late this afternoon the New York Times broke a story that Warren Buffett was in talks to buy a 20% stake in shares of BSC. This news sent the entire financial sector higher. Shares of BSC spiked to an intraday high of $128.00. The call side of our October strangle, the October $115 call (BSC-JC), hit an intraday high of $14.90. Our estimated cost for the strangle was $9.50 and we suggested that readers exit if either option hit $14.00. Meanwhile back to the news story...Warren Buffett was not the only investor mentioned as a potential player in BSC. The article also said that Bank of America (BAC), Wachovia (WB) and two different Chinese firms were all in talks with BSC about a possible minority stake. After the initial reaction in the stock price and the financials began to fade there was a rush of reporters who came out stating their opinions that Mr. Buffett was probably not a buyer in BSC at current levels and that this sort of deal doesn't fit his profile.

Picked on September 09 at $105.37
Change since picked: +17.63
Earnings Date 09/20/07 (confirmed)
Average Daily Volume = 8.7 million
 

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