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Call Updates

Amgen Inc. - AMGN - cls: 58.17 change: +0.34 stop: 54.90

AMGN was getting some positive press on Friday. Shares managed to close over short-term resistance near $58.00. Yet the rally wasn't strong enough to breakout past the 200-dma or the $60.00 level. The stock under performed the BTK biotech index on Friday. Overall the pattern continues to look bullish. Friday's close over $58 looks like a breakout from its four-week trading range. We would suggest new positions here. However, we want to remind readers that the 200-dma and the $60.00 mark will be a hurdle and more conservative traders might want to wait for further signs of strength before initiating positions. Our target is the $64.00-65.00 range, which might be a little too aggressive given our time frame. AMGN is due to report earnings around October 25th and we don't want to hold over the report. It's also worth noting that AMGN's P&F chart is still bearish and it will take a breakout over $60.00 to change it back into a bullish pattern.

Suggested Options:
We are suggesting the November calls.

BUY CALL NOV 55.00 YAA-KK open interest=5657 current ask $4.35
BUY CALL NOV 57.50 YAA-KY open interest=6615 current ask $2.62
BUY CALL NOV 60.00 YAA-KL open interest=9816 current ask $1.38

Picked on October 11 at $ 58.01
Change since picked: + 0.16
Earnings Date 10/25/07 (unconfirmed)
Average Daily Volume = 11.7 million

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Biogen Idec - BIIB - cls: 69.43 chg: +2.31 stop: 67.63 *new*

Attention - We are adjusting our target on BIIB. Shares of BIIB broke out to new multi-year highs over $69 a share on Friday afternoon. Yet the real story is what happened after hours. After the closing bell it was announced that BIIB's board of directors had authorized management to put the company up for sale. The company had hired Goldman Sachs and Merrill Lynch as financial advisors to facilitate the process. This news had a big impact on the stock price. Shares of BIIB soared more than 16% to more than $81.50 on Friday in after hours trading. If BIIB can maintain this bullish tone over the weekend then the stock will probably gap open higher on Monday morning. We are adjusting our exit target to $80.00. Hopefully the stock gaps open above $80.00 and we'll exit on the opening trading. More aggressive traders may want to aim higher, say the $84-85 range, since the stock might see an intraday spike before paring its gains. We're adjusting the stop loss to $67.63. FYI: The intraday after hours high on Friday was $85.00.

Suggested Options:
We are not suggesting new positions in BIIB at this time.

Picked on October 07 at $ 67.63
Change since picked: + 1.80
Earnings Date 10/23/07 (confirmed)
Average Daily Volume = 4.4 million

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Citigroup - C - clos: 47.87 change: -0.45 stop: 46.64 *new*

Our position in C just got a lot more risky. The company has moved its earnings report from October 19th to October 15th and Citigroup will announcement before the opening bell. There is no way for us to avoid it. Wall Street expects the company to report a profit of 43 cents a share. Meanwhile after hours it was reported that C's CEO Mr. Prince was expected to lose his job next week and that shares of C were trading up over a $1.00 after hours on the news. We couldn't find any specific news about Prince but Citigroup was trading higher, around $48.60, after hours. We are not suggesting new positions at this time. Our initial target is the $49.85-50.00 range. Please note that we are adjusting the stop loss to $46.64.

Suggested Options:
We are not suggesting new positions in C at this time.

Picked on September 16 at $ 46.64
Change since picked: + 1.23
Earnings Date 10/15/07 (confirmed)
Average Daily Volume = 40.7 million

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Cummins Inc. - CMI - cls: 140.02 change: +3.13 stop: 134.45

Friday's market bounce lifted CMI as traders bought the dip near its rising 10-dma. Shares are back to the $140 level and Friday's rebound looks like a new bullish entry point to buy calls. If you're feeling conservative then wait for a new relative high before opening positions. Our target is the $149.50-150.00 range. Keep in mind that we do not want to hold over the October 25th earnings report.

Suggested Options:
We are suggesting the November calls.

BUY CALL NOV 135 CDM-KG open interest=325 current ask $12.00
BUY CALL NOV 140 CDM-KH open interest=714 current ask $ 9.10
BUY CALL NOV 145 CDM-KI open interest=452 current ask $ 6.80
BUY CALL NOV 150 CDM-KJ open interest=279 current ask $ 4.90

Picked on October 11 at $140.85
Change since picked: - 0.83
Earnings Date 10/25/07 (confirmed)
Average Daily Volume = 2.0 million

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Ceradyne - CRDN - cls: 75.68 change: +0.36 stop: 73.95

Readers may want to seriously consider an early exit in CRDN to avoid any further losses. The stock under performed the defense sector and shares barely bounced from short-term support near $75.00. Many of the technical indicators have turned bearish. We also note that the weekly chart has produced a bearish engulfing candlestick pattern. We're not suggesting new positions and if you choose not to exit early then consider a tighter stop loss near $74.50. Our short-term target is the $79.50-80.00 range. The P&F chart is bullish with a $92 target.

Suggested Options:
We are not suggesting new positions in CRDN at this time.

Picked on September 25 at $ 74.61
Change since picked: + 1.07
Earnings Date 11/01/07 (unconfirmed)
Average Daily Volume = 653 thousand

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Deutsche Bank - DB - cls: 131.40 chg: -0.30 stop: 128.99

We have been warning readers to expect DB's consolidation back toward the $130 level. Now that DB has retested $130 as support the stock should bounce. We are suggesting new bullish positions here however readers might want to wait for a new rise past the $132.00 or $132.50 mark before initiating positions. One of the biggest risks to be bullish on DB this week is the large number of earnings reports from the banking sector. Investors' interpretation of the parade of earnings reports this week will probably dictate direction for shares of DB's stock price. More conservative traders may want to tighten their stop loss toward $130.00. There is potential resistance at the 200-dma near $138.70 so we're targeting a rally into the $138.00-140.00 range. The P&F chart is bullish with a $154 target. FYI: The 100-dma near $137 may also be a level of resistance the bulls will have to fight through. Plus, readers should note that we cannot find a confirmed earnings date for DB's earnings report. The only data we can find suggests that DB will report on October 31st. We do not want to hold over the announcement.

Suggested Options:
We are suggesting the November calls.

BUY CALL NOV 130 DB-KF open interest= 210 current ask $5.90
BUY CALL NOV 135 DB-KG open interest= 238 current ask $3.70
BUY CALL NOV 140 DB-KH open interest=1189 current ask $1.70

Picked on October 01 at $130.79
Change since picked: + 0.61
Earnings Date 10/31/07 (unconfirmed)
Average Daily Volume = 633 thousand

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Kohl's - KSS - close: 60.62 change: -0.49 stop: 57.90

It was something of a rocky week for retailers. Most of the same-store sales numbers on Thursday were negative. Yet the government retail sales report on Friday was better than expected. KSS displayed relative weakness on Friday with another dip toward the $60.00 level. Readers could buy a bounce from here but we would suggest waiting for a new rally past $62.00 again. More conservative traders might want to tighten their stops toward $59 or Friday's low near $59.95. Currently our target is the $67.00-68.00 range but the stock has plenty of resistance with its 100-dma near $64 and its exponential 200-dma near $65.

Suggested Options:
If KSS trades back above $62.00 we would suggest the November calls.

Picked on October 11 at $ 62.01
Change since picked: - 1.39
Earnings Date 11/15/07 (unconfirmed)
Average Daily Volume = 5.9 million

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Lehman Brothers - LEH - close: 64.63 change: +0.49 stop: 61.99

This could be a volatile week for the financial stocks. Most of the broker-dealers have already reported so now it's time for the banks. Investor reaction to the earnings news will determine direction for LEH. We would wait for a new rally past $65.00 or $65.25 before initiating new positions. More conservative traders may want to wait for a new rally past its 100-dma at $66.10 before opening new plays. Our target is the $69.85-70.00 range. More aggressive traders may want to aim higher and shoot for the 200-dma.

Suggested Options:
If LEH provides a new entry point we would suggest the November calls.

Picked on October 11 at $ 65.25
Change since picked: - 0.62
Earnings Date 12/13/07 (unconfirmed)
Average Daily Volume = 15.8 million

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Stryker - SYK - cls: 73.92 change: +0.79 stop: 69.45

SYK displayed relative strength again. Thursday's move looked like a bearish reversal but there was no follow through lower. SYK managed to post another 1% gain in spite of news that the company announced it had received an "informal inquiry" by the SEC into possible violations of the Foreign Corrupt Practices Act. We are not suggesting new positions at this time and some of our readers may want to exit early now to lock in a gain. Our target is the $74.90-75.00 range. SYK is due to report earnings on Wednesday after the closing bell. We do not want to hold over the announcement.

Suggested Options:
We are not suggesting new positions in SYK at this time.

Picked on October 02 at $ 70.65
Change since picked: + 3.27
Earnings Date 10/17/07 (confirmed)
Average Daily Volume = 1.4 million

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Terex - TEX - cls: 88.17 change: +1.29 stop: 84.75 *new*

Traders bought the dip on Friday but we're still a little concerned with the new bearish tilt in some of TEX's technical indicators. Shares have a bullish pattern of lower highs but are still struggling with resistance near $91. We would hesitate to open new positions here. Please note we are adjusting our stop loss to $84.75. One concern we have is that TEX might just consolidate sideways for the next week as investors wait to hear the company's earnings report on the 24th. The P&F chart is very bullish with a $100 target. Our target is the $94-95 range although more conservative traders may want to exit near $91.00.

Suggested Options:
We're not suggesting new positions at this time.

Picked on September 25 at $ 86.50
Change since picked: + 1.67
Earnings Date 10/24/07 (confirmed)
Average Daily Volume = 1.8 million
 

Put Updates

None
 

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: 140.93 chg: +0.78 stop: n/a

Note: We are changing our exit price to $6.00.
We need to see a continuation of the DJIA rally if we're going to make it with this strangle play. We only have four trading days left before October options expire. Normally we would have five trading days left but the DJX is a European style option and trading will cease after Thursday even though the option doesn't expire until Saturday. Readers may want to consider an early exit now to salvage some capital. 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 $6.00.

Suggested Options:
We're not suggesting new positions in the DJX..

Picked on September 16 at $134.43
Change since picked: + 6.50
Earnings Date 00/00/00
Average Daily Volume = million
 

Dropped Calls

Intl. Bus. Mach.- IBM - cls: 117.81 chg: -0.24 stop: 114.49

We are closing the IBM call play. The company is due to report earnings this week. It was a challenge to find a correct earnings date and we finally found one on IBM's website suggesting that the company will announce on Tuesday, October 16th. We do not want to hold over the report with a directional play so we're suggesting an exit now. The stock has already hit our initial target in the $118.00-120.00 range. Our secondary target had been the $124.00-125.00 range.

Picked on August 26 at $113.24
Change since picked: + 4.57
Earnings Date 10/17/07 (unconfirmed)
Average Daily Volume = 9.5 million
 

Dropped Puts

None
 

Dropped Strangles

None
 

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