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Call Updates

Broadcom - BRCM - cls: 37.17 change: +0.73 stop: 34.45

BRCM enjoyed a strong session thanks to the rally in tech stocks. Shares rose 2% and closed over resistance at the $37.00 level. Volume remained very light, which undermines the strength of this rally. Tomorrow will be an interesting session to see if shares of BRCM will react to news that the EU is now investigating rival QCOM. 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: + 1.32
Earnings Date 10/10/07 (unconfirmed)
Average Daily Volume = 11.0 million

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Citigroup - C - clos: 47.72 change: +1.05 stop: 45.79

A "return to normal" was a key phrase today. Citigroup was the market-moving story on Monday. The company came out with an earnings warning for its third quarter results. Citigroup now expects third quarter profits to dive 60% compared to last year. That's about $6 billion in writedowns and losses. C's claim that things will return to normal in the fourth quarter help spark the rally. Plus, comments from Saudi Prince Alwaleed Bin Talal, C's largest individual shareholder, that he fully backs C's current management helped soothe investors' concerns. Citigroup's stock dipped to $45.86 this morning and then surged past technical resistance at its 50-dma. Today's move is a bullish engulfing (reversal) pattern candlestick. Our initial target is the $49.85-50.00 range. 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: + 1.08
Earnings Date 10/19/07 (confirmed)
Average Daily Volume = 40.7 million

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Ceradyne - CRDN - cls: 77.64 change: +1.90 stop: 71.74

The DFI defense index climbed to another new all-time high. Meanwhile shares of CRDN also surged this morning and the stock posted a 2.5% gain. Our biggest concern here was the lackluster volume, which doesn't inspire a lot of confidence. 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: + 3.03
Earnings Date 11/01/07 (unconfirmed)
Average Daily Volume = 653 thousand

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Intl. Bus. Mach.- IBM - cls: 119.03 chg: +1.23 stop: 113.90

IBM rallied to a new multi-year high. The stock rose more than 1% and closed above short-term resistance at $119.00. This looks like a new bullish entry point to buy the stock. More conservative traders may want to wait for a rally past potential round-number resistance near $120. The stock has already hit our first target in the $118-120 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: + 5.79
Earnings Date 10/17/07 (unconfirmed)
Average Daily Volume = 9.5 million

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L-3 Comm. - LLL - cls: 104.43 chg: +2.29 stop: 97.99 *new*

The defense sector shot to another new all-time high and helping lead the group was LLL. Shares of LLL marked a 2.2% gain and confirmed the recent breakout over resistance near $102.50. The move over $103 was another entry point to consider buying calls. Please note that we're adjusting our stop loss to $97.99. Our target is the $107.50-110.00 range. More aggressive traders may want to aim higher. The P&F chart points to a $115 target.

Picked on September 25 at $100.96
Change since picked: + 3.47
Earnings Date 10/25/07 (confirmed)
Average Daily Volume = 904 thousand

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Stryker - SYK - cls: 70.13 change: +1.37 stop: 66.49

SYK surged to a 2% gain and managed to close over round-number resistance at the $70.00 mark. This could be used as a new bullish entry point. However, we want to see a new relative high first. That's why we're suggesting a trigger to open positions at $70.65. Our biggest challenge right now is our time frame. SYK is due to report earnings on October 17th and we do not want to hold over the earnings report. 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. 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: 90.04 change: +1.02 stop: 81.99

TEX bounced back above the $90.00 level, which is encouraging but we probably would not open new positions here. We remain bullish on the stock. More conservative traders might want to use a higher stop loss. The P&F chart is very bullish with a $100 target. Our target is the $94-95 range.

Picked on September 25 at $ 86.50
Change since picked: + 3.54
Earnings Date 10/25/07 (unconfirmed)
Average Daily Volume = 1.8 million

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Whole Foods - WFMI - cls: 48.74 change: -0.22 stop: 44.85

A downgrade for grocer Supervalue (SVU) undermined the rest of the industry. Shares of WFMI under performed the market with a 0.4% decline. The trend continues to look bullish but we're not suggesting new positions at this time. 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.

Picked on September 26 at $ 46.26
Change since picked: + 2.48
Earnings Date 11/01/07 (unconfirmed)
Average Daily Volume = 3.2 million
 

Put Updates

Alexander & Baldwin - ALEX - cls: 50.94 chg: +0.81 stop: 52.01

Today's strength in ALEX and its multi-day bounce gives us plenty of reason to consider an early exit in ALEX. We were cautious late last week and remain defensive. However, the rally today did reverse and the stock closed under its 200-dma. That doesn't mean that the bears aren't in trouble here because they are. More conservative traders may want to tighten their stop toward today's high at $51.50. At this time we'd watch for a new decline under $49.70 or $49.50 as a new entry point to buy puts. 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: + 1.44
Earnings Date 10/25/07 (unconfirmed)
Average Daily Volume = 337 thousand

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Cephalon - CEPH - cls: 73.57 chg: +0.51 stop: 74.25

Today's action in CEPH makes us nervous. There was no spike higher at the open. Shares slowly crept higher and look poised to challenge short-term resistance near $74.00. We are not suggesting new positions at this time. Wait for a new decline under $72.00 or even a new relative low under $71.00 before considering new put 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. Remember that any time we play a biotech stock it should be considered higher-risk. There is always the chance that an unexpected headline about a successful or failed clinical trial or FDA decision could send the stock violently one direction or the other.

Picked on September 26 at $ 71.70
Change since picked: + 1.87
Earnings Date 11/08/07 (unconfirmed)
Average Daily Volume = 1.5 million

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IDEXX Labs - IDXX - cls: 107.42 change: -2.17 stop: 113.85

It was another volatile day for IDXX. The bullish market helped lift shares of IDXX toward resistance near its 10-dma. Yet fortunately for the bears, the rally failed and the stock plunged five points on massive volume. This is the third HUGE volume day in a row for IDXX yet we still don't see anything specific in the news. Today's plunge under $110 and its 50-dma looks very bearish. Our target is the $101.00-100.00 range. We do not want to hold over the late October earnings report.

Picked on September 30 at $109.59
Change since picked: - 2.17
Earnings Date 10/27/07 (unconfirmed)
Average Daily Volume = 210 thousand

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Sears Holding - SHLD - cls: 130.28 chg: +3.08 stop: 132.65

SHLD was under performing the market this morning but traders ended up buying the dip near $125 and the stock rebounded back toward resistance near $130. If there is any market follow through on today's rally then we would expect SHLD to hit our stop loss at $132.65 on Tuesday. More conservative traders, if you opened positions this morning, may want to exit early to cut their losses since this is arguable a short-term bullish reversal. We're not suggesting new positions at this time.

Picked on September 30 at $127.20
Change since picked: + 3.08
Earnings Date 11/15/07 (unconfirmed)
Average Daily Volume = 2.3 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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Dow Jones Industrial Avg. - DJX - cls: 140.88 chg: +1.92 stop: n/a

Monday's market rally lifted the DJIA and the DJX to new highs. The breakout over 14,000 (and 140) is pretty bullish. The October $137 calls (DJY-JG) are now trading at $4.50bid/$4.75ask. We only have three weeks left before October options expire. 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: + 6.45
Earnings Date 00/00/00
Average Daily Volume = million
 

Dropped Calls

Lockheed - LMT - cls: 108.74 change: +0.25 stop: 102.45

Target achieved. Defense stocks displayed momentum again and shares of LMT hit a new high at $109.86. Our target was the $109.50-110.00 range. While the play is now closed for us we will be watching for another possible entry point on a dip near $105.

Picked on September 24 at $103.81 *gapped higher
Change since picked: + 4.93
Earnings Date 10/24/07 (unconfirmed)
Average Daily Volume = 2.7 million
 

Dropped Puts

Lamar Advertising - LAMR - cls: 48.72 change: -0.25 stop: 51.55

LAMR continued to under perform the markets today. The stock lost 25 cents after announcing plans to raise another $225 million by selling debt due in 2015. However, that news wasn't the headliner today. After tonight's closing bell it was announced that Standard & Poor's would add LAMR to the S&P midcap 400 index. This after hours announcement pushed LAMR toward $50.50. Mutual funds that track the midcap index will have to buy shares of LAMR. We're suggesting an early exit immediately. Tomorrow's open will probably gap open higher but hopefully we can limit our losses!

Picked on September 30 at $ 48.97
Change since picked: - 0.25
Earnings Date 11/08/07 (unconfirmed)
Average Daily Volume = 1.2 million

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POSCO - PKX - cls: 190.72 change: +11.95 stop: 185.05

The shorts got squeezed again! Today's market rally caught the bears off guard and the market saw a big short squeeze. PKX, a huge momentum stock over the last few weeks, saw a big move as shorts raced to cover. Hopefully none of our readers opened positions when they saw the gap open higher at $184.41. We have to record a loss with our stop at $185.05. Did we mention this was a high-risk play? Now you see why!

Picked on September 30 at $178.77
Change since picked: + 0.00
Earnings Date 10/08/07 (unconfirmed)
Average Daily Volume = 812 thousand
 

Dropped Strangles

None
 

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