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Call Updates

iShares China 25 - FXI - cls: 140.43 chg: -6.02 stop: 149.45

Hmmm... so what do we do now? We've been eyeballing the $140 region as a potential alternative for bullish entry points. Now that the FXI is here we have to decide if it is going to work for us. The FXI lost 4.1% in the U.S. market and did so on above average volume usually not a good sign. Considering the market's overall tone we're going to wait. If we're patient we might get a better entry point near $136-135 instead, which is around the January lows. We'll be looking for a bounce near $135 which would give us an opportunity to place a relatively tight stop loss just south of there. We were officially waiting for a breakout over $160 with our suggested trigger at $161.01. If we are triggered our target is the $178.00-180.00 zone although we'll have to keep a wary eye on potential resistance at the 100-dma.

Picked on February xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 00/00/00
Average Daily Volume = 7.8 million

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Potash - POT - close: 156.76 change: -0.60 stop: 147.75

POT out performed its peers in the fertilizer industry and shares closed with a fractional loss today. Traders were buying the dip near $153. That doesn't mean we should be opening new positions. In reality we are seeing the same bearish technicals on short-term and daily time frames as we are in some of its peers. We're long-term bullish on this stock but would probably hesitate to jump in here. However, we will note that POT almost delivered a perfect bounce from prior resistance and what should be support in the $152.50 zone. More conservative traders may want to tighten their stops closer to $150 (or even under 152). Considering the market's recent weakness, readers could always protect themselves by jumping out now. Then you could jump back in on a dip near $150 or the 50-dma or a breakout over its trendline of lower highs. POT has already surpassed our early target in the $158-160 zone so readers should have already booked some profits. 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: + 9.26
Earnings Date 04/24/08 (unconfirmed)
Average Daily Volume = 5.9 million

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Shaw Group - SGR - close: 62.76 change: -0.15 stop: 59.85

Warning! SGR did deliver a bounce like we were expecting but it failed near $65.00. This is short-term bearish and SGR looks headed for the $60.00 level and it would not take much to stop us out at $59.85. More conservative traders will want to strongly consider an early exit right here to limit any losses. We are not suggesting new positions at this time. We have two targets. Our first target is the $69.50-70.00 zone. Our second, more aggressive target is the $74.00-75.00 zone. The Point & Figure chart is very bullish with an $81 target.

Picked on February 24 at $ 64.53
Change since picked: - 1.77
Earnings Date 04/08/08 (unconfirmed)
Average Daily Volume = 1.8 million

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Smith Intl - SII - close: 62.02 change: -0.79 stop: 59.90

We see a similar pattern setting up in SII. The stock bounced but it failed early on and failed again this afternoon. This looks very short-term bearish and more conservative traders will want to strongly consider an early exit now to limit or avoid any losses. Short-term and daily technicals are rolling over. 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: + 1.50
Earnings Date 04/24/08 (unconfirmed)
Average Daily Volume = 3.5 million

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Yahoo! Inc. - YHOO - close: 28.06 change: +0.29 stop: n/a

What is this? Do our eyes deceive us? YHOO not only posted a gain but out performed the market although it may have gotten a boost from the 2.2% bounce in shares of MSFT, which were effectively upgraded this morning. We do not see any changes from our previous comments on YHOO. We have less than three weeks before March options expire. Right now we're speculating that MSFT will raise its bid before expiration. This remains a very risky, aggressive bet. Our suggested calls were the March $30 or March $32.50 strikes.

Picked on February 17 at $ 29.66
Change since picked: - 1.60
Earnings Date 04/17/08 (unconfirmed)
Average Daily Volume = 54 million
 

Put Updates

Ambac Fincl. - ABK - cls: 10.72 change: +0.78 stop: n/a

Shares of ABK soared this afternoon and ended the session with a 7.8% gain on hopes that a deal was close to being done. There seemed to be conflicting stories about whether or not the street would get any news tomorrow. Yesterday we reported that many believe there would be material news in the next 24 to 48 hours. If an acceptable deal does get announced the financial stocks are likely to see a sizeable rebound. Just news of a bailout plan may not be enough. The details and interpretation of the plan will be what moves the stock and the market. This remains a very speculative play. We will definitely hold over the April earnings if we get the chance. If you are considering new positions here then think about an out of the money April call as a potential hedge against a deal getting done. 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: - 0.82
Earnings Date 04/24/08 (unconfirmed)
Average Daily Volume = 10.9 million

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MBIA Inc. - MBI - close: 12.98 change: +0.36 stop: n/a

ABK is getting all the headlines but shares of MBI aren't moving much either. The stock continues to drift sideways. We don't see any changes from our weekend comments. If you're thinking about opening new plays then consider an out of the money April call as a hedge against a bailout coming to pass. 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. We will definitely hold over the April earnings if we get the chance.

Picked on January 27 at $ 14.20
Change since picked: - 1.22
Earnings Date 01/31/08 (confirmed)
Average Daily Volume = 15.2 million

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NII Holdings - NIHD - close: 39.96 change: -0.28 stop: 41.26

NIHD failed to escape the market volatility on Tuesday. The stock dropped from $40.62 to $38.63 and then back again. The drop under $39.00 was enough to hit our suggested trigger to buy puts at $38.95. The play is now open. If you are looking for a new entry point a failed rally near $40.50 or a new decline under $39.00 would be suggested entry points. Our target is the $35.50-35.00 zone. More aggressive traders could aim for the trendline of lower lows. The Point & Figure chart is bearish with a $19 target. FYI: The latest data lists short interest at 3.8% of the 171.7 million-share float, which is only about 1.5 days worth of short interest.

Picked on March 04 at $ 38.95 *triggered
Change since picked: + 1.01
Earnings Date 02/27/08 (confirmed)
Average Daily Volume = 3.3 million

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Precision Castparts - PCP - cls: 106.00 chg: -3.18 stop: 111.51*new*

Weakness in PCP continued. The stock slipped to $103.26 before paring its losses. We are going to adjust our stop loss to $111.51. Another failed rally under $110 could be used as a new entry point for puts. Our target is the $101.00-100.00 zone. The most challenging part of this trade is our stop loss placement. After Friday's 4.4% decline knowing where to put the stop is tough. The $112 area looks like a good spot but just to give PCP a little room to move we're suggesting a stop at $112.65.

Picked on March 03 at $109.49 *triggered
Change since picked: - 3.49
Earnings Date 05/08/08 (unconfirmed)
Average Daily Volume = 1.9 million

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Everest Re Group - RE - close: 95.23 chg: -0.01 stop: 100.35*new*

RE slipped to $94.24 and then recovered back to breakeven. Broken support near $96.00 should be new resistance but if it does trade over $96.00 look for a failed rally near $98.00 as a new entry point for puts. We are adjusting our stop loss down to $100.35, just above the February 27th high. We have two short-term targets. Our first, conservative target is $93.50. Our second, more aggressive target is the $91.00-90.00 zone. We're suggesting a stop loss at $102.01 but more conservative traders might be able to get away with a stop around $100.51. FYI: The P&F chart is bearish with a $74 target.

Picked on February 28 at $ 97.93
Change since picked: - 2.70
Earnings Date 04/23/08 (unconfirmed)
Average Daily Volume = 487 thousand

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Sears Holding - SHLD - close: 95.94 change: -0.53 stop: 100.51

The action in SHLD today just screams "bearish failed rally". The stock spiked to $100 and quickly faded. More aggressive traders will want to consider buying puts right now with a stop just above $100. We are going to stick to our plan. We are suggesting a trigger to buy puts at $94.00. If we are triggered at $94.00 our target is the $85.50-85.00 zone near its January lows. Looking at the weekly chart and its bearish channel more aggressive traders may want to aim for $80 but we would expect a bounce near $85.00. FYI: A breakdown under $94 would produce a new triple-bottom breakdown sell signal on the Point & Figure chart. There are a lot of investors who believe SHLD is going lower. The most recent data puts short interest at more than 19% of the 65 million-share float. That is almost 7 days worth of short interest. Naturally that raises our risk of a short squeeze.

Picked on February xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 02/28/08 (confirmed)
Average Daily Volume = 2.8 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: 22.29 chg: -0.71 stop: n/a

Was the market open? Then CROX must have traded lower. It's been almost that bad since the company's last earnings report. Shares closed down with another 3% decline today. The stock is very oversold and way overdue for a correction. If CROX gives us one more spike lower the puts should hit our target. Speaking of puts the March $25 puts hit an intraday high of $3.40 on Tuesday. We are currently not suggesting new positions. The options we had suggested were the March $40 calls (CQJ-CH) and the March $25 puts (CZL-OE). Our estimated cost was $2.50. We were previously suggesting an exit if either option hit $4.25. We have since adjusted our target to $3.75. We have just less than three weeks left before March options expire. More aggressive traders may want to keep the $4.25 target. Editor's note: It looks like the root symbol for the March $25 put changed from CQJ to CZL a few days ago.

Picked on February 17 at $ 33.43
Change since picked: -11.14
Earnings Date 02/19/08 (confirmed)
Average Daily Volume = 5.2 million
 

Dropped Calls

CF Industries - CF - close: 119.62 change: -0.86 stop: 117.45

There was no doubt today. CF tried to rally this morning but quickly failed near short-term resistance. The ensuing sell-off pushed CF to an intraday low of $115.05. CF definitely hit our stop loss at $117.45 this time. Now both short-term and daily technicals have rolled over yet CF remains very much in a long-term up trend. Nimble traders could try and scalp a few points toward $110. We are bullish on this sector and will step back and watch for a new entry point either near the 50-dma or the 100-dma currently near $100, which would look like a great entry point.

Picked on February 19 at $121.03 *gap entry / stopped 117.45
Change since picked: - 1.41
Earnings Date 04/24/08 (unconfirmed)
Average Daily Volume = 2.8 million

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Monsanto - MON - cls: 111.72 change: -6.91 stop: 113.99

MON is another agriculture/fertilizer stock that got hammered today. Once it broke support at $115 it didn't stop until shares hit $107.85. The selling was pretty ugly and it happened on strong volume, which is another bearish sign. MON remains in a longer-term up trend so we're going to keep an eye on it for support near its 100-dma (near $105) or a dip near $100. Shares hit our stop loss at $113.99. We warned readers these stocks were volatile and today was a good example why.

Picked on February 12 at $118.09 *gap entry /stopped 113.99
Change since picked: - 6.37
Earnings Date 04/03/08 (unconfirmed)
Average Daily Volume = 7.1 million
 

Dropped Puts

None
 

Dropped Strangles

None
 

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