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Call Updates

Apple Inc. - AAPL - close: 129.40 change: +4.54 stop: see details

Tech stocks were the market leaders on Wednesday and AAPL helped lead the charge. The good news for the bulls is that there was no follow through lower on yesterday's bearish reversal pattern. Instead investors rushed in to buy the stock and shares added 3.5%. Our only concern is the lackluster volume, which is not a sign of confidence from the bulls. It is anyone's guess if the market continues to tomorrow or will AAPL trade sideways near the $130 strike price as February equity options expire after Friday. Overall we remain bullish.

AAPL play #1 - directional calls

If you're holding calls then today was a welcome event. AAPL looked poised to test the $120 level as of Tuesday's close. Now shares look set to breakout over $130. We are suggesting a stop loss at 116.99 under last week's low. More conservative traders may want to use a stop closer to $120. Our target is the $139.00-145.00 range.

AAPL play #2 - Credit put spread

So much for an opportunity to sell another credit put spread near $120. The quick bounce higher suggested traders are eager to buy AAPL at this level. Again, our biggest worry today was the lack of volume, which is not a bullish sign. The options we suggested were buying the March $110 put and selling the March $120 put.

AAPL play #3 - Sell Naked Puts

We don't see any changes from our previous comments here. If you want to open new naked put positions then consider waiting for a move over $131.00. We had suggested selling the March $150 put with plans to buy it back when AAPL hits $139.00.

Picked on February 10 at $125.48
Change since picked: + 3.92
Earnings Date 04/24/08 (unconfirmed)
Average Daily Volume = 44.4 million

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Apollo Group - APOL - close: 73.83 chg: +0.90 stop: 69.95

APOL produced a 1.2% gain but I feel like the stock under performed. Shares should have done better with the major indices up so strongly. That worries me and volume came in light today. More conservative traders might be tempted to try and raise their stop. If you want to see more momentum on an entry point then wait for a rise over $76.00. Our target is the $80.00-81.00 range.

Picked on February 10 at $ 73.94
Change since picked: - 0.11
Earnings Date 04/07/08 (unconfirmed)
Average Daily Volume = 3.1 million

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CONSOL Energy - CNX - cls: 80.15 change: +3.17 stop: 73.85

The whipsaws in CNX are getting pretty rough. Up a few points on Monday, down a few yesterday, up again today. That can be rough on a trader's stomach unless you're day trading. Shares rally quickly today and added 4.3% almost erasing yesterday's losses. The close over $80.00 is a minor victory for the bulls but the stock was pulling back into the closing bell. Volume did come in above average on today's rally, which is a positive sign. We have two targets for CNX. Our first target is the $84.50-85.00 range. Our second, more aggressive target is the $88.00-90.00 zone. The P&F chart has a brand new triple-top breakout buy signal with a $124 target.

Picked on February 10 at $ 77.54
Change since picked: + 2.61
Earnings Date 04/24/08 (unconfirmed)
Average Daily Volume = 3.3 million

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Monsanto - MON - cls: 114.01 change: -1.04 stop: 107.85

All of the fertilizer stocks under performed the market today. A day after MON raised its earnings guidance the stock was unable to build on the news. Today's relative weakness is a big warning sign for the bulls although traders did buy the dip at $112.35. We suggested yesterday that a dip into the $112.50-110.00 zone would be a new bullish entry point. At this point, given the relative weakness today, we would either wait for a dip and a bounce near $110 or a new move over $117.00 before considering new bullish positions. We have two targets. Our first target is the $127.00 level. Our second target is the $137.00-140.00 range. As we discussed earlier a move over $118 triggered a new P&F chart buy signal, which now forecasts a $157 price target. These have been very volatile stocks so readers should consider them aggressive, higher-risk plays. FYI: MON is presenting at the Morgan Stanley Basic Materials Conference 2008 on February 21st.

Picked on February 12 at $118.09 *gap higher entry
Change since picked: - 4.08
Earnings Date 04/03/08 (unconfirmed)
Average Daily Volume = 7.1 million

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Mosaic - MOS - close: 100.04 change: -0.37 stop: 89.45

MOS, like MON, under performed the markets today, which is a warning for the bulls. However, the weakness in MOS was fractional. The stock is holding the $100 level for now. We would consider new bullish positions on a bounce from here or a bounce from the $97-98 zone. Sadly, technical support is way down near the 50-dma around $90.00 so we have a wide, aggressive, high-risk stop loss. We have two targets. The first target is $109.75, just under the January highs. Our second, more aggressive target is the $118.00-120 zone. These are very volatile stocks with a lot of intraday spikes so we're playing with a very wide stop loss. More conservative traders may want to use a tighter stop in the $94-95-96 zone. We would consider this a more aggressive, higher-risk play.

Picked on February 12 at $101.83 *gap higher entry
Change since picked: - 1.79
Earnings Date 04/09/08 (unconfirmed)
Average Daily Volume = 5.8 million

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Petroleo Brasileiro - PBR - cls: 117.15 chg: +3.40 stop: 104.95

News that an Argentine division of PBR, a Brazilian company, reported earnings today that were only inline with expectations did not dampen shares of PBR here in the states. PBR rallied almost 3% lifted by strength in the oil and oil service sectors. The next hurdle for the bulls is potential resistance at the $120 level. If PBR does dip then look for a new bullish entry point near $114.00-112.50. Our target is the $128.00-130.00 range. The move over $116 has produced a new Point & Figure chart buy signal. Actually it is a quadruple-top bullish breakout buy signal with a $138 target. FYI: Another risk is PBR's earnings report. We can't find an earnings date and they normally report in mid February. That is a risk because we do not like to hold over an earnings report.

Picked on February 12 at $116.00 *triggered
Change since picked: + 1.15
Earnings Date 02/12/08 (unconfirmed)
Average Daily Volume = 7.6 million

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Potash - POT - close: 147.69 change: -1.59 stop: 136.99

POT bounced again this morning but struggled to maintain its gains. Like the rest of this industry shares of POT under performed the market. If POT does see any profit taking we would consider buying the bounce anywhere in the $145-140 zone. We have two targets for POT. Our first target is the $158.00-160.00 range. Our second, more aggressive target is the $168.00-170.00 zone. More aggressive traders may want to aim significantly higher. The Point & Figure chart is forecasting a $222 target. Again, this is a very volatile stock. Readers should consider it an aggressive, higher-risk trade. Aggressive traders could put their stop under the 50-dma. We're going to try and get away with a stop loss under Monday's low.

Picked on February 12 at $147.50 *triggered
Change since picked: + 0.19
Earnings Date 04/24/08 (unconfirmed)
Average Daily Volume = 5.9 million
 

Put Updates

Ambac Fincl. - ABK - cls: 9.37 change: +0.47 stop: n/a

After yesterday's 15% sell-off ABK produced a 5% bounce today. Overall we don't see any changes from our previous comments. Currently we are suggesting the May puts and a speculative out of the money March call as a hedge to protect us if a bailout deal does get done. Many on Wall Street expect something to occur this week but it could drag out to next week. The options we suggested were the May $5 or $2.50 puts and the March $20 call.

Picked on January 27 at $ 11.54
Change since picked: - 2.17
Earnings Date 04/24/08 (unconfirmed)
Average Daily Volume = 10.9 million

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Bear Stearns - BSC - cls: 80.53 chg: +1.60 stop: 84.31

It's tough for the markets to rally without the financials and the financials did manage a bounce today. Although it is worth noting that the banks under performed the broader indices. Meanwhile the XBD brokerage index rose 1.2%. Shares of BSC rebounded back toward the $80 region. The trend is still negative but we would look for a failed rally near $82.50 or a new drop under $79.50 before considering new put positions. Our target is the $71.00-70.00 zone. Our biggest risk is that a bailout plan for the bond insurers does get done (and probably this coming week). If plan is announced and the street thinks it has a good chance of actually coming to pass then shares of BSC are bound to rally sharply due to its exposure to the sub-prime mess.

Picked on February 11 at $ 79.49 *triggered
Change since picked: + 1.04
Earnings Date 03/13/08 (unconfirmed)
Average Daily Volume = 7.4 million

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FedEx - FDX - close: 89.18 change: +1.08 stop: 92.05

Most quote services will tell you that the intraday high for FDX today was $90.50 but that was a bad tick. Shares never traded above $89.50 today. Investors will find it interesting to note that the Department of Transportation released some data today that said freight activity in 2007 fell for the second year in a row. The trend remains bearish with FDX under $90 and its 50-dma. There is potential support at $86 but our target is the $81.00-80.00 zone.

Picked on February 10 at $ 88.00
Change since picked: + 1.18
Earnings Date 03/20/08 (unconfirmed)
Average Daily Volume = 3.2 million

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W.W.Grainger - GWW - close: 77.41 chg: +1.56 stop: 80.05

Market strength helped GWW pack on 2% today but volume was under the norm. This looks like a new entry point to buy puts. Another alternative would be to wait for a breakdown under support at $75.00. Our target is the $70.75-70.00 zone.

Picked on February 10 at $ 76.65
Change since picked: + 0.76
Earnings Date 04/16/08 (unconfirmed)
Average Daily Volume = 1.0 million

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iShares DJ Financial - IYF - cls: 88.56 chg: +0.83 stop: 93.01

Looking at the last couple of days the bulls are trying to pull the IYF out of its bearish dive but they're struggling. A failed rally in the $89-90 region can be used as a new entry point. We're aiming for a test of the $80.00 region. Our official target is the $81.00-80.00 zone.

Picked on February 06 at $ 88.62
Change since picked: - 0.06
Earnings Date 00/00/00
Average Daily Volume = 1.1 million

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MBIA Inc. - MBI - close: 11.64 change: +0.14 stop: n/a

The bounce even MBI wasn't very encouraging. After yesterday's 15% sell-off the stock struggled with new resistance near $12.00. Meanwhile MBI completed its sale of $1.1 billion in stock at $12.15 a share and those investors are already under water. We do not see any changes from our previous comments. Currently we are suggesting the May puts and a speculative out of the money March call as a hedge to protect us if a bailout deal does get done. Many on Wall Street expect something to occur this week but it could drag out to next week. The options we suggested were the May $7.50, $5.00 or $2.50 puts. We recently added a deep out of the money call, the March $22.50 call, as a hedge in case a rescue plan does get announced and the stocks react to it.

Picked on January 27 at $ 14.20
Change since picked: - 2.56
Earnings Date 01/31/08 (confirmed)
Average Daily Volume = 15.2 million

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Myriad Genetics - MYGN - cls: 38.54 chg: +0.24 stop: 43.01

The bounce in MYGN was pretty anemic. Shares were rolling over into the afternoon. We remain bearish and don't see any changes from our previous comments. Our target is the $36.00-35.00 range. More aggressive traders may want to aim lower. The Point & Figure chart is bearish with a $34 target. FYI: We always consider a biotech stocks to be a more aggressive, higher risk play because you never know when an FDA decision will be released or some clinical trial info will come out that could send the stock moving sharply either direction.

Picked on February 07 at $ 39.75 *triggered
Change since picked: - 1.21
Earnings Date 02/05/08 (confirmed)
Average Daily Volume = 801 thousand

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Sears Holding - SHLD - cls: 101.14 chg: +2.07 stop: 100.25

SHLD managed to erase yesterday's losses with a $2 gain. A better than expected retail sales report gave retailers a bump but the rally stalled. The RLX retail index under performed the rest of the market today. Currently our official entry point to buy puts is at $94.75. If triggered at $94.75 our target is the $86.00-85.00 range. We do not want to hold over the end of February (unconfirmed) earnings report.

Picked on February xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 02/28/08 (unconfirmed)
Average Daily Volume = 3.0 million

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Simon Properties - SPG - cls: 85.18 chg: +0.01 stop: 90.61

SPG under performed its peers in the REIT space and the major market indices today. The stock rallied to $87.74 this morning and reversed. However, the stock looked like it was trying to bounce again this afternoon. The overall trend continues to look bearish. Look for a failed rally near its 50-dma (88.25) or the $90 level as a new bearish entry point to buy puts. Our target is the $76.00-75.00 range.

Picked on February 07 at $ 84.39 *triggered
Change since picked: + 1.69
Earnings Date 02/01/08 (confirmed)
Average Daily Volume = 2.7 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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DJIA 1/100 Index - $DJX - cls: 125.52 chg: +1.79 stop: n/a

With only two days left for February options the DJX is moving the wrong way. We seriously doubt that the DJX will be able to rally past the $127-128 zone before Friday's closing bell. This week's two-day rally has pretty much killed our strangle. We are not suggesting new strangle positions at this time. The options we suggested were the February $127 calls (DJW-BW) and the February $122 puts (DJW-NR). Our estimated cost was $3.36.

Picked on January 29 at $124.80
Change since picked: + 0.72
Earnings Date 00/00/00
Average Daily Volume = million

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Google - GOOG - close: 534.62 chg: +16.53 stop: n/a

Today's 3% rally in shares of GOOG looks like the death knell for our post-earnings strangle play. The stock has broken through resistance at its 10-dma and trendline of lower highs and we're seeing some bullish buy signal on some of its oscillators. Odds are good that GOOG will not trade under $5.00 by Friday's closing bell (and it's almost guaranteed that GOOG isn't trading over $600 by Friday's close). We are not suggesting new positions. The options we suggested were the February $600 calls (GOO-BT) and the February $500 puts (GOP-NO). Our estimated cost was $17.00. We want to sell if either option hits $ 9.00 or more in an effort to salvage any capital. FYI: Two weeks ago the GOP-NO traded at $21.70.

Picked on January 30 at $548.27
Change since picked: -13.65
Earnings Date 01/31/08 (confirmed)
Average Daily Volume = 5.6 million
 

Dropped Calls

None
 

Dropped Puts

Avalonbay - AVB - close: 95.77 change: +2.07 stop: 95.05

The almost perpetually volatile REIT stocks have stung the shorts again. AVB, which produced a very clear breakdown on Monday, has rallied up through resistance at its 10-dma, 50-dma and the $95.00 level in the last two sessions. Technical oscillators have reversed sharply. We would have been stopped out at $95.05. If this rally continues look for AVB to struggle with potential resistance near $100.

Picked on February 11 at $ 89.06
Change since picked: + 6.71
Earnings Date 02/06/08 (confirmed)
Average Daily Volume = 1.2 million

 

Dropped Strangles

None
 

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