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Call Updates

Apple Inc. - AAPL - close: 121.54 change: -2.28 stop: see details

Trading in AAPL has been bearish all week long as traders continue to sell the rally attempts. The stock has a clear short-term trend of lower highs. AAPL is now close to testing support near $120 and its February low of $117.27. A breakdown under $117 would be very bearish!

AAPL play #1 - directional calls

Directional call plays are getting killed if you bought the initial bounce a week ago. Sadly AAPL has not produced the explosive rebound we were expecting. The current pull back to the $120 level does offer another entry point to buy AAPL near support but we'd really like to see some sign of a bounce first. Of course that is challenging in this market. Today is a great example of what that is challenging with AAPL opening higher and then sliding the rest of the session. We have been warning readers that we might get another dip to the $120 region. 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

The pull back toward $120 is great but we don't want to consider opening new positions until we see signs of a bounce. At this time wait for a new rally over $126.50 (Thursday's high). The alternative would be to open positions on a dip in the $120-118 zone but quickly close your play if AAPL breaks under $117. The options we suggested were buying the March $110 put and selling the March $120 put.

AAPL play #3 - Sell Naked Puts

It is the same story here. Before you consider selling naked puts we want to see a decent bounce first. We would wait for a rally over Thursday's high (126.50). The alternative is sell puts on the dip in the 120-118 zone but if it breaks under $117.00 we would close the play. 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: - 3.94
Earnings Date 04/24/08 (unconfirmed)
Average Daily Volume = 44.4 million

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Atwood Oceanics - ATW - cls: 92.27 change: -3.09 stop: 87.45

Oil service stocks got hammered with profit taking today even through crude oil pretty much held its recent gains. Shares of ATW lost 3.2% and produced a very clear bearish engulfing candlestick pattern. Normally these patterns are one-day bearish reversals so bullish traders need to be defensive here. Readers might want to tighten their stops closer to the $90.00 level. 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: + 1.90
Earnings Date 05/08/08 (unconfirmed)
Average Daily Volume = 654 thousand

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CF Industries - CF - close: 122.96 change: -4.04 stop: 109.49

Ouch! CF just took a chunk out of our unrealized gains with a 3.18% loss. Today's session also produced a bearish engulfing candlestick pattern (see the ATW update above). We would wait and watch for a dip and bounce near $120 or its rising 10-dma near $117 before considering new bullish call positions. 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.

Picked on February 19 at $121.03 *triggered/gap higher
Change since picked: + 1.93
Earnings Date 04/24/08 (unconfirmed)
Average Daily Volume = 2.8 million

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Monsanto - MON - cls: 116.43 change: -2.62 stop: 107.85

It's the same story but different stock with MON. Up in the morning and down throughout the day, this stock hit some profit taking. Unfortunately, it also produced a bearish engulfing (reversal) candlestick pattern. We would wait for a decent bounce near $115 or a new high over $120.50 before considering new 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.

Picked on February 12 at $118.09 *gap higher entry
Change since picked: - 1.66
Earnings Date 04/03/08 (unconfirmed)
Average Daily Volume = 7.1 million

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Mosaic - MOS - close: 111.75 change: -2.29 stop: 99.45

Shares of MOS hit another new high, this time at $116.00, before sinking into a 2% loss on the day. If the market breaks lower then these high-flyers, like MOS, could really see some profit taking in hurry. Right now we would watch for a bounce near $105-106 or its 10-dma as a potential entry point for new bullish positions. MOS has already hit our first target near $110. Our second target is the $118.00-120.00 zone. These are very volatile stocks with a lot of intraday spikes. We would consider this a more aggressive, higher-risk play.

Picked on February 12 at $101.83 *gap higher entry
Change since picked: + 9.92
Earnings Date 04/09/08 (unconfirmed)
Average Daily Volume = 5.8 million

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Nucor - NUE - close: 64.15 change: -1.84 stop: 59.95

Steel stocks were not immune to the profit taking today. NUE lost 2.7%. A bounce near $62.50 or is its 10-dma could be used as a new bullish entry point. 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: + 2.14
Earnings Date 04/17/08 (unconfirmed)
Average Daily Volume = 5.0 million

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Petroleo Brasileiro - PBR - cls: 118.20 chg: -2.34 stop: 109.45

PBR hit another all-time high, this time at $121.89, and then gave it all back. Shares lost 1.9% and closed back under broken resistance/support near $120. Look for a dip back into the $116-115 zone. 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: + 2.20
Earnings Date 02/12/08 (unconfirmed)
Average Daily Volume = 7.6 million

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Potash - POT - close: 156.87 change: +0.87 stop: 144.75

POT grew to a new high this morning at $159.40. The stock eventually pared its gains but still closed in the green. If the market continues lower then look for POT to retrace toward the $150 region. POT has already achieved our first target in the $158-160 zone. 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.

Picked on February 12 at $147.50 *triggered
Change since picked: + 9.37
Earnings Date 04/24/08 (unconfirmed)
Average Daily Volume = 5.9 million

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Smith Intl - SII - close: 61.46 change: -2.23 stop: 58.45

Ouch! The profit taking in the oil service stocks was vicious today. SII lost 3.5% for no real reason other than traders trying to lock in a gain. Look for a dip or bounce near $60 and its 10-dma as a new bullish entry point to buy calls. Our first target is the $64.25-65.00 range. Our second target is the $68.00-70.00 zone. We would expect SII to pull back initially when it hits $65.00 since shares will encounter additional resistance with the 50 and 100-dma. If you're looking for a new entry point wait for a dip in the $61-60.00 zone. The P&F chart for SII is very bullish with a $77 target.

Picked on February 17 at $ 60.52
Change since picked: + 0.94
Earnings Date 04/24/08 (unconfirmed)
Average Daily Volume = 3.5 million

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Yahoo! Inc. - YHOO - close: 28.42 change: -0.41 stop: n/a

YHOO continues to drift lower. We do not see any changes from our prior comments. This remains a very speculative (high-risk) play but there is still a strong camp that believes MSFT will up their bid. We would suggest the March $30 or March $32.50 calls.

Picked on February 17 at $ 29.66
Change since picked: - 1.24
Earnings Date 04/17/08 (unconfirmed)
Average Daily Volume = 54 million
 

Put Updates

Ambac Fincl. - ABK - cls: 9.23 change: -0.71 stop: n/a

ABK continues to slip. The stock lost 7.1% albeit on relatively low volume. 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: - 2.31
Earnings Date 04/24/08 (unconfirmed)
Average Daily Volume = 10.9 million

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W.W.Grainger - GWW - close: 74.70 chg: -0.22 stop: 78.26

We don't see any changes from our prior comments on GWW. The trend continues to look bearish. Our target is the $70.75-70.00 zone.

Picked on February 10 at $ 76.65
Change since picked: - 1.95
Earnings Date 04/16/08 (unconfirmed)
Average Daily Volume = 1.0 million

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iShares DJ Financial - IYF - cls: 86.78 chg: -1.07 stop: 91.85

The IYF just produced its seventh failed rally under $89.00 in the last several days. 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: - 1.84
Earnings Date 00/00/00
Average Daily Volume = 1.1 million

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MBIA Inc. - MBI - close: 11.90 change: -0.28 stop: n/a

Initially resistant to the idea of breaking up their business models now MBI and ABK are strongly considering how they might do just that. One business would keep the profitable (and safer) municipal bond business. The other business would handle everything else, which is currently poisoning the financial water supply. Our outlook remains bearish. 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: - 2.30
Earnings Date 01/31/08 (confirmed)
Average Daily Volume = 15.2 million

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Mohawk Ind. - MHK - cls: 73.10 chg: -1.37 stop: 78.05

Thursday proved to be something of a volatile session for MHK. The stock spiked higher to $76.60 this morning and quickly gave back all of its gains. We remain bearish and see this as another entry point for puts. 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: - 0.60
Earnings Date 02/13/08 (confirmed)
Average Daily Volume = 907 thousand

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Myriad Genetics - MYGN - cls: 36.83 chg: -0.95 stop: 40.51

MYGN came within 14 cents of our target today. Shares plunged to $36.14 before bouncing late this afternoon. The trend remains bearish. More conservative traders may want to tighten their stop closer to the 10-dma (near 38.30). 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: - 2.92
Earnings Date 02/05/08 (confirmed)
Average Daily Volume = 801 thousand

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Sears Holding - SHLD - cls: 96.00 chg: -2.48 stop: 100.55 *new*

Once again shares of SHLD look weak and we're tempted to open put positions here. However, we've waited this long we'll 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: 83.73 chg: -1.24 stop: 90.15

SPG continues to churn sideways. We remain bearish. You could argue that today's session is another failed rally under $86.00 and thus a new entry point for puts. Our target is the $76.00-75.00 range.

Picked on February 07 at $ 84.39 *triggered
Change since picked: - 0.66
Earnings Date 02/01/08 (confirmed)
Average Daily Volume = 2.7 million

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Legacy Vulcan - VMC - cls: 68.12 chg: -0.14 stop: 70.86

VMC's rally from yesterday stalled near $69.40. This might be a new entry point for puts. 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: + 1.48
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: 26.12 chg: -1.32 stop: n/a

CROX continues to sink following its recent earnings report. The stock lost another 4.8% today and is nearing the January lows. We are not suggesting new strangles at this time. 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.

Picked on February 17 at $ 33.43
Change since picked: - 7.31
Earnings Date 02/19/08 (confirmed)
Average Daily Volume = 5.2 million

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Genentech - DNA - close: 71.75 change: -0.62 stop: n/a

If you missed your entry point today we'll get another chance tomorrow. The FDA decision on Avastin isn't due out until late Friday afternoon probably in the last hour or half hour of trading, potentially after the closing bell. We would not open positions after the decision is known. We are suggesting a strangle to capture any post decision move. The options we suggested were the March $75 calls (DWN-CO) and the March $70 puts (DWN-ON). However, now that DNA has moved closer to $70.00 you'll want to try and balance your investment on both sides of the strangle. Our estimated cost was $2.80. We want to sell if either option hits $5.00 or higher.

Picked on February 20 at $ 72.37
Change since picked: - 0.62
Earnings Date 04/10/08 (unconfirmed)
Average Daily Volume = 3.5 million
 

Dropped Calls

None
 

Dropped Puts

Bear Stearns - BSC - cls: 82.23 chg: -0.82 stop: 85.05

Murphy's law is alive and well. This morning's market strength was just enough to push BSC above resistance near $85.00 and hit our stop loss at $85.05. BSC and the rest of the broker-dealer sector promptly reversed lower and look poised to continue lower. We might reload this play and try again if BSC trades under $78.00. We had been aiming for the $71-70 zone.

Picked on February 11 at $ 79.49 *triggered /stopped 85.05
Change since picked: + 2.74
Earnings Date 03/13/08 (unconfirmed)
Average Daily Volume = 7.4 million

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FedEx - FDX - close: 89.32 change: -0.62 stop: 90.55

Our put play in FDX is another casualty of the market's volatility today. Shares spiked to $90.68, which was just enough to hit our stop loss (90.55) and close the play. We would be tempted to try this play again if FDX trades under $88.00 or $87.00. We were aiming for the $81-80 zone.

Picked on February 10 at $ 88.00 /stopped 90.55
Change since picked: + 1.32
Earnings Date 03/20/08 (unconfirmed)
Average Daily Volume = 3.2 million
 

Dropped Strangles

None
 

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