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Call Updates

CF Industries - CF - close: 128.36 change: -2.63 stop: 117.45

CF suffered a little bit on Tuesday probably due to news that the company has shut down one of its ammonia plants in Medicine Hat, Alberta. This is an unplanned outage and it will take three weeks for repairs. This could impact the company's quarterly performance. Then again it could also put even more pressure on an industry already experiencing shortages and rising demand. If you're looking for a new entry point watch for a pull back or a bounce near the $124.50-122.00 zone. Our target is the $138.00-140.00 zone. The Point & Figure chart is bullish with an updated $143 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: + 7.33
Earnings Date 04/24/08 (unconfirmed)
Average Daily Volume = 2.8 million

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Monsanto - MON - cls: 120.76 change: -1.16 stop: 113.99

After yesterday's pop higher MON hit some profit taking today but not before the stock hit an intraday high of $123.80. We have two targets. Our first target is the $127.00 level. Our second target is the $137.00-140.00 range. We are adjusting our stop loss to $113.99. The fertilizer and agriculture stocks have been very volatile so readers should consider them aggressive, higher-risk plays.

Picked on February 12 at $118.09 *gap higher entry
Change since picked: + 3.83
Earnings Date 04/03/08 (unconfirmed)
Average Daily Volume = 7.1 million

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Petroleo Brasileiro - PBR - cls: 121.75 chg: +1.85 stop: 114.90*new*

PBR is breaking out and looks poised to run to new highs. Unfortunately, we finally found an earnings date for the company. PBR is due to report after the closing bell on Thursday. Therefore we plan to exit at the close on Thursday to avoid holding over the announcement. Sometimes that is a tough call when the stock really looks ready to run but normally it is just not worth the risk. We are raising our stop loss to $114.90. Our target is the $128.00-130.00 range.

Picked on February 12 at $116.00 *triggered
Change since picked: + 5.75
Earnings Date 02/12/08 (unconfirmed)
Average Daily Volume = 7.6 million

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Potash - POT - close: 161.53 change: -2.75 stop: 147.75

POT also succumbed to some profit taking after yesterday's big gains. The stock did hit a new high at $166.40 before pulling back. More conservative traders will want to seriously consider exiting here. We are not suggesting new positions at this time but will be looking at any dips near the 10-dma as a potential entry. The stock has already hit 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: +14.03
Earnings Date 04/24/08 (unconfirmed)
Average Daily Volume = 5.9 million

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Shaw Group - SGR - close: 66.80 change: +0.66 stop: 58.45

Traders continue to buy the dips in SGR. We don't see any changes from our previous comments. We are listing two targets. Our first target is the $69.50-70.00 zone. We suggest closing most of your position there. Our second, more aggressive target is the $74.00-75.00 range. The Point & Figure chart is very bullish with an $81 target. FYI: More conservative traders may want to use a stop loss closer to $60.00.

Picked on February 24 at $ 64.53
Change since picked: + 2.27
Earnings Date 04/08/08 (unconfirmed)
Average Daily Volume = 1.8 million

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Smith Intl - SII - close: 65.87 change: +2.37 stop: 59.90*new*

SII is another example of the strength in oil service stocks today. The stock rallied another 3.7%. Plus, the stock broke through resistance near $65.00 and its 50 and 100-dma. We were expecting an initial pull back when SII first hit these levels. This is indeed a very bullish session for SII. We are adjusting our stop loss to $59.90. The stock has already hit our first target in the $64 zone. Our second target is the $68.00-70.00 zone. The P&F chart for SII is very bullish with an $80 target (it was a $77 target last week).

Picked on February 17 at $ 60.52
Change since picked: + 5.35
Earnings Date 04/24/08 (unconfirmed)
Average Daily Volume = 3.5 million

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MEMC Electr. - WFR - cls: 81.79 chg: +0.38 stop: 77.45

WFI briefly traded above resistance in the $82.00-82.50 zone and hit our trigger to buy calls at $82.55 opening this play. If you missed the entry point we would still consider new bullish positions here at current levels or on a dip near $80.00. We have two targets. Our first target is the $89.00-90.00 range and we suggest readers close out the majority of their position here. Our second, more aggressive target is the $94.00-95.00 range near its December highs.

Picked on February 26 at $ 82.55 *triggered
Change since picked: - 0.76
Earnings Date 04/24/08 (unconfirmed)
Average Daily Volume = 5.9 million

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Yahoo! Inc. - YHOO - close: 28.22 change: +0.09 stop: n/a

If this were a technical play YHOO would look bearish. Right now we're playing the story and the expectation that MSFT is going to raise its bid for the company. More than that we are speculating that MSFT is going to raise its bid before March calls expire in less than four weeks. That could be the biggest challenge. MSFT might raise its bid but if they drag their feet too long we lose. This remains a very risky, aggressive bet.

Picked on February 17 at $ 29.66
Change since picked: - 1.44
Earnings Date 04/17/08 (unconfirmed)
Average Daily Volume = 54 million
 

Put Updates

Ambac Fincl. - ABK - cls: 12.19 change: -0.22 stop: n/a

ABK actually traded down in spite of another late day spike on yet another CNBC headline that the deal was coming together. Still no solid bailout deal for ABK yet but it "sounds" like it is making progress. Of course the unofficial deadline for the ratings agencies to downgrade ABK and MBI was the last day of February. Now we're not sure since S&P yesterday and Moody's today have reaffirmed the triple-A credit ratings, even though S&P has kept ABK on negative creditwatch. How's that for speaking out both sides of your mouth? We are not suggesting new positions at this time. Previously we had been suggesting the May out-of-the money puts and a speculative out-of-the money March ($20) call as a hedge should a bailout plan come to pass.

Picked on January 27 at $ 11.54
Change since picked: + 0.65
Earnings Date 04/24/08 (unconfirmed)
Average Daily Volume = 10.9 million

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MBIA Inc. - MBI - close: 15.28 change: +0.70 stop: n/a

News that Moody's had reaffirmed its triple-A credit rating on MBI gave the stock a boost. Yet Moody's actually changed their outlook to "negative". There is still no deal yet and the end of the month (February) could see further volatility in ABK and MBI if a bailout plan doesn't get done. We're not suggesting new positions at this time. We had been suggesting the out-of-the-money May puts and a March $22.50 (or $20.00) call as a hedge in case a bailout plan for the bond insurers does get done.

Picked on January 27 at $ 14.20
Change since picked: + 1.08
Earnings Date 01/31/08 (confirmed)
Average Daily Volume = 15.2 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: 24.53 chg: -0.51 stop: n/a

It has been five trading days since CROX's earnings report. Normally with a strangle over an earnings report if the initial two or three day move (many times one-day move) is not enough to make the strangle profitable it never will be profitable. However, CROX has continued to slide every day since and has ignored market strength. As traders we need to remain defensive here but we're going to keep the play open. Nothing moves in a straight line for very long so CROX could see an oversold bounce at any time. 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: - 8.90
Earnings Date 02/19/08 (confirmed)
Average Daily Volume = 5.2 million

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Genentech - DNA - close: 77.50 change: -0.46 stop: n/a

DNA's lack of follow on Monday's pop is a little worrisome. It is natural to see some profit taking after a big move and DNA did not give back very much bit it definitely impacts the options. More conservative traders will want to consider an early exit soon. We are not suggesting new positions. The options we had suggested were the March $75 calls (DWN-CO) and the March $70 puts (DWN-ON). 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: + 5.13
Earnings Date 04/10/08 (unconfirmed)
Average Daily Volume = 3.5 million
 

Dropped Calls

Atwood Oceanics - ATW - cls: 98.66 change: +2.42 stop: 89.19

Target achieved. Oil service stocks rallied again and ATW added 2.5%. Shares of ATW hit an intraday high of $99.66. Our target was the $99.00-100.00 range. We remain bullish on ATW but would look for a dip back toward $95 (or a breakout over $100) before considering new call positions.

Picked on February 17 at $ 90.37
Change since picked: + 8.29
Earnings Date 05/08/08 (unconfirmed)
Average Daily Volume = 654 thousand

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Mosaic - MOS - close: 115.63 change: -1.43 stop: 104.45

MOS has achieved our second target. The stock actually succumbed to profit taking after a sharp, two-day rally but MOS traded to an intraday high of $119.78 before pulling back. Our first target was near $110. Our second target was the $118.00-120.00 zone. We remain bullish on MOS but would look for a dip near $110 or its 10-dma before considering new positions again.

Picked on February 12 at $101.83 *gap higher entry
Change since picked: +13.80
Earnings Date 04/09/08 (unconfirmed)
Average Daily Volume = 5.8 million

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Nucor - NUE - close: 67.91 change: +1.13 stop: 59.95

Target achieved. The rally in NUE continues. Shares hit an intraday high of $68.38. Our target was the $68.00-70.00 zone. The trend still looks strong and more aggressive traders may want to try and exit closer to the $70.00 level. We remain bullish on NUE but we'll wait for a some sort of correction before considering new call positions.

Picked on February 17 at $ 62.01
Change since picked: + 5.90
Earnings Date 04/17/08 (unconfirmed)
Average Daily Volume = 5.0 million
 

Dropped Puts

W.W.Grainger - GWW - close: 76.84 chg: +0.91 stop: 78.26

We are giving up on GWW and suggesting an early exit now even though GWW has not yet hit our stop loss. The DJIA and S&P 500 index appear to have broken out higher from their consolidation pattern. Meanwhile GWW is also breaking out from its short-term bearish trend. We are hitting the eject button now to cut our losses.

Picked on February 10 at $ 76.65
Change since picked: + 0.19
Earnings Date 04/16/08 (unconfirmed)
Average Daily Volume = 1.0 million

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iShares DJ Financial - IYF - cls: 89.34 chg: +0.38 stop: 90.65

When the market starts climbing on negative news, like the inflation data out today, then bears need to turn cautious. Furthermore the financials might see some relief on a bond insurer bailout deal. The IYF is still very much in a bearish trend. However, short-term the ETF is starting to breakout higher from its recent consolidation. The rally did stall at technical resistance near its 50-dma, which is what it was supposed to do. We are suggesting an early exit now on some relative strength indicators and a rise in volume.

Picked on February 06 at $ 88.62
Change since picked: + 0.72
Earnings Date 00/00/00
Average Daily Volume = 1.1 million

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Mohawk Ind. - MHK - cls: 76.35 chg: +1.69 stop: 78.05

MHK produced a midday spike above $78.00 and technical resistance at its 100-dma, which was enough to hit our stop loss at $78.05. We did not see anything specific to account for MHK's relative strength other than the market itself. If we had not been stopped out today we probably would have suggested an early exit given MHK's breakout above its trendline of lower highs.

Picked on February 14 at $ 73.70
Change since picked: + 2.65
Earnings Date 02/13/08 (confirmed)
Average Daily Volume = 907 thousand

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Sears Holding - SHLD - cls: 101.36 chg: +2.28 stop: 100.76

There should be no surprises here. We warned readers yesterday that if the market continues higher today we expected SHLD to hit our stop loss. The fact that stocks rallied above the inflation news and that retailers rallied in spite of negative earnings guidance from Home Depot is bullish. SHLD has broken out from its four-week bearish consolidation but remains inside its long-term bearish trend. Our stop loss was $100.76. FYI: SHLD has earnings on Thursday.

Picked on February 22 at $ 94.75 *triggered
Change since picked: + 6.61
Earnings Date 02/28/08 (confirmed)
Average Daily Volume = 3.0 million

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Legacy Vulcan - VMC - cls: 71.53 chg: +1.67 stop: 70.86

The bounce in VMC continued into Tuesday and the stock broke through resistance near $70.00 hitting our stop loss at $70.86. Like many stocks in our closed put plays today VMC is breaking out higher from its four-week bearish consolidation but remains in a longer-term bearish trend.

Picked on February 17 at $ 66.64
Change since picked: + 4.89
Earnings Date 04/30/08 (unconfirmed)
Average Daily Volume = 2.1 million
 

Dropped Strangles

None
 

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