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Call Updates

Apple Inc. - AAPL - close: 122.18 change: -2.45 stop: see details

What we expected to be more of an explosive rebound in AAPL has turned into a flop. Shares are rolling over and as we discussed over the weekend AAPL looks poised to retest support near $120.

AAPL play #1 - directional calls

The action in the NASDAQ looked pretty negative today but AAPL is nearing support at $120. We would consider new positions right here. Yet if you're patient we might get a better entry point closer to $120 tomorrow. Our stop loss is under the early February 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

For the credit put spread we want to wait for signs of a bounce before launching new positions. The options we suggested were buying the March $110 put and selling the March $120 put.

AAPL play #3 - Sell Naked Puts

Again, look for a bounce before launching new naked put positions. 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: - 3.30
Earnings Date 04/24/08 (unconfirmed)
Average Daily Volume = 44.4 million

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Atwood Oceanics - ATW - cls: 93.40 change: +3.03 stop: 87.45

Oil-related stocks were big winners today thanks to the sharp advance in crude oil to $100 a barrel. ATW broke out over resistance near its 50-dma and posted a 3.3% gain. We would consider new positions here but the patient trader might want to wait for a dip back toward $91.50-90.00 as an alternative entry point. Our target is the $99.00-100.00 zone. FYI: ATW has a moderate amount of short interest, about 7.4% of the 27.6 million-share float. That is about 4 days worth of short interest.

Picked on February 17 at $ 90.37
Change since picked: + 3.03
Earnings Date 05/08/08 (unconfirmed)
Average Daily Volume = 654 thousand

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CF Industries - CF - close: 126.88 change: +8.51 stop: 109.49

Our bullish play on CF is off to a strong start. Shares gapped open higher at $121.03 and surged to a 7.2% gain and a new high. We were suggesting a trigger to buy calls at $121.01 so the open this morning would have triggered us. If you missed the entry point look for a dip back into the $122-120 zone as an alternative entry. Our target is the $138.00-140.00 zone. The Point & Figure chart is bullish with a $141 target. FYI: The most recent data puts short interest at 6.8% of the 53.4 million-share float. That is only 1.8 days worth of short interest but a breakout higher could certainly spark some short covering. Plus, CF is due to present at the basic materials conference on Feb. 20th.

Picked on February 19 at $121.03 *triggered/gap higher
Change since picked: + 5.65
Earnings Date 04/24/08 (unconfirmed)
Average Daily Volume = 2.8 million

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Monsanto - MON - cls: 117.87 change: +2.52 stop: 107.85

Almost all the fertilizer-related companies were trading higher today. MON rose close to 2.2% and is testing resistance at $120 again. We would consider new positions here but readers have a choice. You could wait for a breakout over $120 or a dip back toward $116-114. 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: - 0.22
Earnings Date 04/03/08 (unconfirmed)
Average Daily Volume = 7.1 million

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Mosaic - MOS - close: 109.55 change: +6.18 stop: 89.45

Target achieved. Shares of MOS, another fertilizer company, surged almost 6% and hit an intraday high of $111.73. Our first target was the $109.75 mark. Volume was above average on the day, which is a good sign. Shares also managed to maintain most of its gains unlike the broader market. We would not suggest new positions at current levels but look for a dip back to the $105-103 zone as a potential entry point. Our second, more aggressive target is the $118.00-120 zone. These are very volatile stocks with a lot of intraday spikes. We would consider this a more aggressive, higher-risk play. FYI: We are adjusting our stop loss to $97.45.

Picked on February 12 at $101.83 *gap higher entry
Change since picked: + 7.72
Earnings Date 04/09/08 (unconfirmed)
Average Daily Volume = 5.8 million

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Nucor - NUE - close: 63.89 change: +1.88 stop: 58.45

NUE posted a 3% gain today and challenged round-number resistance at the $65.00 level. Investors are encouraged about demand for iron and steel and believe the industry will be able to raise prices. We would still consider new positions here or wait for a dip back into the $63.00-61.00 region. Our target is the $68.00-70.00 zone since the $70.00 level is likely to be significant resistance. The P&F chart is bullish with a $76 target.

Picked on February 17 at $ 62.01
Change since picked: + 1.88
Earnings Date 04/17/08 (unconfirmed)
Average Daily Volume = 5.0 million

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Petroleo Brasileiro - PBR - cls: 117.66 chg: +3.21 stop: 109.45*new*

The crude oil rally lifted the ADR shares of PBR to a new all-time high over resistance at the $120 level. PBR was unable to hold $120.54 but still posted a 2.8% gain. We would consider new positions here but readers could choose to look for a dip near $115 or a new high over $120 to open plays. Please note that we are raising our stop loss to $109.45. We are considering a second target near $140. Currently, 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 $150 target (it was a $138 target last week). 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: + 1.66
Earnings Date 02/12/08 (unconfirmed)
Average Daily Volume = 7.6 million

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Potash - POT - close: 152.50 change: +4.62 stop: 136.99

POT tagged a new all-time high of $156.31 this afternoon. The stock continues to look bullish as it tries to push through resistance in the $150-155 region. We would still consider new positions here or on a dip near $150-147. 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. FYI: It looks like POT's CEO was the catalyst behind today's fertilizer rally. A Bloomberg article out today discussed the CEO's views that rising food demand in China and India will power the industry for years. The article also mentioned that management is so confident they almost chose to take the company private last month.

Picked on February 12 at $147.50 *triggered
Change since picked: + 5.00
Earnings Date 04/24/08 (unconfirmed)
Average Daily Volume = 5.9 million

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Smith Intl - SII - close: 62.73 change: +2.21 stop: 58.45

SII, another oil service play, rose sharply following the rally in crude today. If you missed today's bounce then consider waiting for a dip into the $62.00-60.00 zone as a new entry point to buy calls. We are considering a second, more aggressive target in the $68-70 range. Right now our target is the $64.25-65.00 zone. The P&F chart for SII is very bullish with a $77 target.

Picked on February 17 at $ 60.52
Change since picked: + 2.21
Earnings Date 04/24/08 (unconfirmed)
Average Daily Volume = 3.5 million

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Yahoo! Inc. - YHOO - close: 29.01 change: -0.65 stop: n/a

The drama continues with the MSFT-YHOO deal. MSFT's Bill Gates said they are not raising the $31-a-share bid. Meanwhile YHOO has adopted a huge change in its severance package for employees should management change in the next two years. YHOO lost 2.19% on the session. This could all be more posturing for an eventual deal but we want to remind readers that this could definitely fall apart and we would lose all of our speculative gamble here. Currently the word on this deal is that MSFT is gearing up for a proxy fight to force YHOO to accept their bid. This play remains an aggressive bet that MSFT will eventually raise its bid into the $33-34-35 zone thus today's dip only makes the $32.50 option even cheaper. You might want to consider buying the $30 option. We were looking at March strikes.

Picked on February 17 at $ 29.66
Change since picked: - 0.65
Earnings Date 04/17/08 (unconfirmed)
Average Daily Volume = 54 million
 

Put Updates

Ambac Fincl. - ABK - cls: 9.94 change: -0.28 stop: n/a

Late last week the news was that FGIC was asking to be separated into two companies. One with the strong and profitable municipal bond business. The other with its CDO and mortgage-related businesses. Now speculation is running rampant that ABK and MBI will do the same. Currently there are talks that ABK is trying to raise $2 billion in capital to shore up its books and keep its triple A credit rating. Overall 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 $5 or $2.50 puts and the March $20 call.

Picked on January 27 at $ 11.54
Change since picked: - 1.60
Earnings Date 04/24/08 (unconfirmed)
Average Daily Volume = 10.9 million

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Bear Stearns - BSC - cls: 80.02 chg: -2.77 stop: 85.05*new*

There was no new merger news to prop up shares of BSC so the stock slipped 3.3% and closing near round-number support at $80.00. We suspected that shares would move lower today. We remain bearish on the stock and would consider new puts at current levels. 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: + 0.53
Earnings Date 03/13/08 (unconfirmed)
Average Daily Volume = 7.4 million

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FedEx - FDX - close: 89.25 change: +1.33 stop: 90.55 *new*

There are not any good reasons for FDX to be up today. A rally in crude oil to $100 a barrel only hurts FDX's profit margins. Yet shares added 1.28% and on decent volume. One possible catalyst for today's strength is Wal-Mart's (WMT) better than expected earnings, which might suggest the economy isn't so bad. Look for a new decline under $88.00 before considering new puts. 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: + 1.25
Earnings Date 03/20/08 (unconfirmed)
Average Daily Volume = 3.2 million

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W.W.Grainger - GWW - close: 74.54 chg: -0.58 stop: 80.05

GWW continues to look bearish and the stock produced a bearish engulfing candlestick. Shares also set a new relative low. Our target is the $70.75-70.00 zone.

Picked on February 10 at $ 76.65
Change since picked: - 2.11
Earnings Date 04/16/08 (unconfirmed)
Average Daily Volume = 1.0 million

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iShares DJ Financial - IYF - cls: 86.72 chg: -0.59 stop: 91.85

Wall Street remains concerned over the financials and their exposure to the sub-prime crisis. The IYF rallied toward $89 this morning and then faded. We remain bearish here. More conservative traders will want to strongly consider adjusting their stop closer to $90.00. 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: - 1.90
Earnings Date 00/00/00
Average Daily Volume = 1.1 million

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MBIA Inc. - MBI - close: 11.70 change: -0.54 stop: n/a

The big news in MBI today was a change in leadership. CEO Gary Dunton has resigned. In his place is Joseph Brown, who was the previous CEO and Chairman. Overall we do not see any changes from our prior 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. (at this point you may want to consider the March $20 call instead)

Picked on January 27 at $ 14.20
Change since picked: - 2.50
Earnings Date 01/31/08 (confirmed)
Average Daily Volume = 15.2 million

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Mohawk Ind. - MHK - cls: 72.93 chg: +0.86 stop: 78.05

MHK produced a minor oversold bounce today. Potentially fueling the move was the better than expected earnings from WMT, which suggests the economy may not be so bad. Plus, the new homebuilder confidence index edged up one point from multi-year lows. We remain bearish on MHK and would still suggest new puts on a failed rally near $75.00. There is potential support at $70.00 but we're aiming for the $66.50-65.00 zone near its January 2008 bottom.

Picked on February 14 at $ 73.70
Change since picked: - 0.77
Earnings Date 02/13/08 (confirmed)
Average Daily Volume = 907 thousand

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Myriad Genetics - MYGN - cls: 37.88 chg: +0.24 stop: 40.51

MYGN traded sideways in a very narrow range for almost the entire session. We do not see any changes from our weekend comments. Our MYGN 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: - 1.87
Earnings Date 02/05/08 (confirmed)
Average Daily Volume = 801 thousand

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Sears Holding - SHLD - cls: 96.31 chg: -2.44 stop: 100.25

SHLD continues to build on its bearish pattern and it has been tough waiting and watching it occur. Shares produced a failed rally pattern near $100 and its 50-dma today. The intraday high was actually 101.81. That was an early morning spike that quickly failed. The stock closed at new three week lows and looks poised to breakdown under $95 soon. We are strongly tempted to suggest new put positions right here, especially considering another bearish engulfing candlestick pattern today. However, we're going to wait and stick to our plan. 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 (now confirmed) earnings report.

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

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Simon Properties - SPG - cls: 83.37 chg: -1.14 stop: 90.15

SPG produced a failed rally at $86.00 this morning and the move looks like a new entry point for puts (as we suggested this weekend). Or readers could wait for a new decline under $82.40 as an entry point. Our target is the $76.00-75.00 range.

Picked on February 07 at $ 84.39 *triggered
Change since picked: - 1.02
Earnings Date 02/01/08 (confirmed)
Average Daily Volume = 2.7 million

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Legacy Vulcan - VMC - cls: 66.50 chg: -0.14 stop: 70.86

We do not see any changes from our weekend comments on VMC. We would still consider new put positions here. This looks like a spot to capture a drop back toward the January lows. Our target is the $60.50-60.00 zone. The stop loss is a little bit wider than we would like but VMC can see some big $3-$4 swings intraday so readers should consider this an aggressive, higher-risk play.

Picked on February 17 at $ 66.64
Change since picked: - 0.14
Earnings Date 04/30/08 (unconfirmed)
Average Daily Volume = 2.1 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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CROCS Inc. - CROX - close: 32.08 chg: -1.35 stop: n/a

It was a volatile morning for CROX as investors tried to make some last minute adjustments before earnings. Shares produced a bearish failed rally pattern at the 50-dma this morning and eventually closed down 4.18% on strong volume. The real news was the earnings report out after the closing bell today. Wall Street was looking for an EPS of 44 cent a share. CROX beat by 1 cent but then issued an earnings warning. Management still claims that CROX will see 20% to 30% earnings growth over the next few years. After hours reaction to the news was a drop toward $27.00 a share. We are no longer suggesting new strangle positions. The options we had suggested were the March $40 calls (CQJ-CH) and the March $25 puts (CQJ-OE). Our estimated cost was $2.50 and we wanted to sell if either option hits $4.25 or higher. Watch those puts tomorrow morning!

Picked on February 17 at $ 33.43
Change since picked: - 1.35
Earnings Date 02/19/08 (confirmed)
Average Daily Volume = 5.2 million
 

Dropped Calls

None
 

Dropped Puts

Devon Energy - DVN - close: 96.20 chg: +3.00 stop: 95.15

An unexpected rally in crude oil and natural gas helped push shares of DVN up through major resistance at the $95.00 level this morning. We would have been stopped out at $95.15. Hopefully when the stock gapped open at $95.00 no one chose to open new put positions.

Picked on February 17 at $ 93.20
Change since picked: + 3.00
Earnings Date 05/01/08 (unconfirmed)
Average Daily Volume = 3.5 million
 

Dropped Strangles

None
 

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