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Call Updates

Covance - CVD - cls: 93.09 change: +0.39 stop: 84.99

CVD continues to show relative strength and completely ignore the market's sell-off. The stock hit another new high today before paring its gains. We're going to stick to our plan and wait for a dip. We are now suggesting that readers buy a dip into the $90.50-90.00 zone. We are raising our stop loss to $86.99. We are setting two targets. Our first conservative target is $94.50-95.00. Our second, more aggressive target is the $99.00-100.00 range.

Picked on January xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 01/23/08 (unconfirmed)
Average Daily Volume = 395 thousand

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Encana - ECA - close: 68.46 change: -0.43 stop: 67.75

A bounce in crude oil was not enough to save the oil stocks from more profit taking. ECA performed better than most with a 0.6% loss compared to a 1.8% decline in the S&P 500. ECA bullish trend may be in trouble. Shares produced a failed rally at the $70.00 mark today and did so on decent volume. Plus, we are seeing a bearish divergence between price and the MACD indicator. Wait for a bounce from $68.00 or a new rally over $70.00 before considering new call positions. Our short-term target is the $74.85-75.00 range. FYI: The P&F chart is bullish with a $92 target.

Picked on January 03 at $ 70.10 *triggered
Change since picked: - 1.64
Earnings Date 02/14/08 (unconfirmed)
Average Daily Volume = 2.7 million

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Hess Corp. - HES - cls: 91.43 chg: -1.49 stop: 89.90

HES is another oil stock that could not escape the market-wide sell-off. Shares lost 1.6% and look poised to retest support near $90.00 soon. Wait for signs of a bounce before considering new bullish positions. Our target is the $99.00-100.00 range. We do not want to hold over the late January earnings report.

Picked on January 07 at $ 92.00 *triggered
Change since picked: - 0.57
Earnings Date 01/30/08 (unconfirmed)
Average Daily Volume = 4.5 million

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Hologic - HOLX - close: 68.11 chg: -2.40 stop: 66.45

Tuesday was a rough day for HOLX. Once the market indices broke down to new relative lows it looked like bulls in HOLX started heading for the exits. Shares lost 3.3% and the MACD indicator is nearing a new sell signal. We are not suggesting new positions at this time and more conservative traders, if you're still in the play, may want to exit early right here. HOLX has already hit our initial target in the $69.50-70.00 range. Our more aggressive target is the $74.00-75.00 range. FYI: The P&F chart is bullish and points to an $87 target. FYI: HOLX is due to present at an investor conference in San Francisco on January 9th.

Picked on December 18 at $ 66.22
Change since picked: + 1.89
Earnings Date 01/30/08 (unconfirmed)
Average Daily Volume = 2.8 million

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Humana Inc. - HUM - cls: 81.92 chg: +0.36 stop: 75.99

Investors are still fleeing into the healthcare stocks. Traditionally seen as a safe haven during times of market or economic turmoil the healthcare sector was the one of the few sectors trading higher today. Shares of HUM also traded higher and hit a new all-time high at $83.07. We are sticking to our plan for now. We are suggesting an entry zone to buy calls in the $79.00-78.00. Although we would keep an eye on the $80.00 level, which should be new round-number support. Our initial target is the $84.50-85.00 range. More aggressive traders may want to aim higher. The Point & Figure chart is bullish with a $96 target.

Picked on January xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 02/04/08 (unconfirmed)
Average Daily Volume = 1.3 million

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Inverness Medical - IMA - cls: 59.40 chg: +1.51 stop: 54.49

IMA continues to rebound and shares broke through resistance near $58.00 and its 50-dma. Unfortunately, the stock actually gapped open at $58.50. We were suggesting a trigger to buy calls at $58.15. We have adjusted out entry point to $58.50. Now that the play is open our target is the $64.00-65.00 range. If you missed today's entry point there is a decent chance that IMA will pull back and retest the $58 region as new support and readers can buy a dip there. FYI: IMA will be presenting at the huge healthcare/drug/biotech conference this coming week.

Picked on January 08 at $ 58.50 *triggered/gap open entry
Change since picked: + 0.90
Earnings Date 02/26/08 (unconfirmed)
Average Daily Volume = 857 thousand
 

Put Updates

Air Methods - AIRM - close: 48.22 chg: +0.68 stop: 51.50

Warning! Relative strength in AIRM especially today with the market down sharply is a big warning for the bears. We are not suggesting new positions at this time. More conservative traders will want to consider an early exit now or a tighter stop just above $50.00. If AIRM doesn't start moving our direction soon we'll drop it. Our target is the $44.10-44.00 range. The P&F chart is bearish with a $39 target. Something to be aware of is AIRM's high degree of short interest. The most recent data put short interest at almost 16% of the stock's very small 10.6 million-share float. We normally don't play stocks that have an average daily volume under 250,000 shares. AIRM's volume is under that amount. The combination of low volume and high short interest probably makes this a higher-risk, more aggressive play.

Picked on January 04 at $ 47.95 *bad tick-entry
Change since picked: + 0.27
Earnings Date 03/06/08 (unconfirmed)
Average Daily Volume = 149 thousand

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Essex Property - ESS - close: 87.58 chg: -1.90 stop: 95.34

As expected ESS produced an oversold bounce but the bounce ran out of steam at $94.27 just under its 10-dma. ESS gave back all of its gains and erased yesterday's bounce. The stock saw a pretty big intraday swing. This sort of volatility should drive up option premiums. Readers may want to do some additional profit taking here. The stock has already exceeded our first target in the $90.25-90.00 range. Our second target is the $85.50-85.00 zone. We do not want to hold over the early February earnings report, which the company just confirmed will occur on February 6th. FYI: Our biggest risk is a short squeeze. The most recent data puts short interest at close to 16% of the 22.9 million-share float. That is a relatively high amount of short interest and a small float. This does raise the risk for this play.

Picked on December 30 at $ 95.34
Change since picked: - 7.76
Earnings Date 02/06/08 (confirmed)
Average Daily Volume = 315 thousand

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Shire Plc - SHPGY - close: 67.28 change: +1.85 stop: 70.05

We've been warning readers to expect a bounce in SHPGY but we weren't expecting it today, especially with the U.S. market down so sharply. We have to remember that SHPGY is based in Britain and trades on the London exchange. We only trade the ADR shares here in the U.S., which is why the stock gapped open higher as the ADR shares adjusted to a pop higher in London. Moving the stock were positive analyst comments about rising prescriptions for SHGPY's ADHD drug, Vyvanse. A failed rally here near $68 or under its 50-dma could be used as a new entry point for puts. The stock has already hit our 65.25-65.00 target zone. Our second, more aggressive target is the $62.00-60.00 zone. The Point & Figure chart is bearish with a $54 target. FYI: Any time we play a biotech or even a drug stock we're dealing with a higher-risk situation. We are at risk that some FDA decision or some clinical trial news could send the stock gapping one direction or the other.

Picked on December 13 at $ 68.07 *triggered/gap down entry
Change since picked: - 0.80
Earnings Date 02/00/08 (unconfirmed)
Average Daily Volume = 956 thousand
 

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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Encana - ECA - close: 68.46 chg: -0.43 stop: n/a

We don't see any changes from our prior comments on this ECA strangle play. The clock is running out for us. If given the chance readers will want to consider exiting early to salvage any capital. This was a high-risk play but that doesn't mean we have to wait for the options to expire worthless. We're not suggesting new strangle positions at this time. The options we listed for the strangle were the January $75 calls (ECA-AO) and the January $60 puts (ECA-ML). Our estimated cost is $0.65. We want to sell if either option hits $1.25 or higher. FYI: The P&F chart is bullish with a $92 target.

Picked on December 20 at $ 67.52
Change since picked: + 0.94
Earnings Date 02/14/08 (unconfirmed)
Average Daily Volume = 2.7 million
 

Dropped Calls

Noble Energy - NBL - close: 77.61 chg: -1.41 stop: 77.45

Today's bounce in crude oil futures failed to have an impact on shares of NBL. The stock behaved very poorly with a bearish failed rally near $80.00 and a breakdown under what should have been decent support at $78.00. We would have been stopped out at $77.45. NBL's intraday low was $77.33. We would keep an eye on NBL for a bounce near $75.00 and its rising 50-dma.

Picked on December 19 at $ 78.25
Change since picked: - 0.64
Earnings Date 02/26/08 (unconfirmed)
Average Daily Volume = 1.5 million
 

Dropped Puts

Boeing - BA - close: 79.91 change: -2.96 stop: 88.05

Target exceeded again! Another day of big cap declines was lead by a 3.5% decline in BA. Yesterday shares exceeded our target in the $85.55-85.00 range. Today the stock has exceeded our second target in the $81.50-80.00 zone. BA's intraday low was $79.65. The stock is very oversold and due for a bounce. The stock should find new resistance in the $85.00-86.00 region. We are adjusting our stop loss to $88.05.

Picked on December 04 at $ 91.43 *triggered/gap down
Change since picked: -11.52
Earnings Date 01/31/08 (unconfirmed)
Average Daily Volume = 7.0 million

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Vornado Realty Trust - VNO - cls: 79.26 chg: -4.65 stop: 86.55

Target exceeded. It was another volatile day for the REIT stocks and VNO was no exception. Shares rallied toward the $86.00 level early this morning but then gave it all back and closed at new relative lows. The intraday low was $79.10. Our target was the $80.50-80.00 range. We were suggesting that more aggressive traders might want to aim for the $75 zone. We'll keep an eye on VNO for another entry point for puts. Given the recent action the $75 region looks like a good target.

Picked on December 30 at $ 86.30
Change since picked: - 2.39
Earnings Date 02/27/08 (unconfirmed)
Average Daily Volume = 1.3 million
 

Dropped Strangles

None
 

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