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Call Updates

Aluminum Corp. of China - ACH - cls: 41.06 chg: -2.54 stop: 39.85

Shares of ACH were hammered on Wednesday. The Shanghai exchange plunged more than 5% and when trading opened up here in the U.S. shares of ACH gapped down to catch up with overseas markets. ACH ended the session down 5.8%. The stock has clearly broken its two-week up trend and is nearing a 50% retracement of the two-week rally. A bounce from round-number support at $40.00 could be used as a new entry point for bullish positions. Unfortunately, many of the short-term technicals have naturally turned bearish. ACH has already exceeded our initial target at $44.85. Our second, more aggressive target is the $47.75-50.00 zone.

Picked on March 30 at $ 40.80 /1st target exceeded (44.85))
Change since picked: + 0.26
Earnings Date 03/18/08 (unconfirmed)
Average Daily Volume = 1.8 million

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Ashland Inc. - ASH - close: 51.16 change: -1.08 stop: 47.95 *new*

ASH closed the day with a 2% decline. More importantly we see a short-term bearish engulfing (reversal) candlestick pattern (try saying that five times fast). We have been suggesting that readers consider waiting for a dip to $50 as their bullish entry point and it looks like we could see that dip pretty soon. We have decided to try and reduce our exposure some by inching up the stop loss to $47.95. There is potential resistance at its 200-dma in the $54-55 zone. Our target is the $57.00-58.00 range. We do not want to hold over the late April earnings report.

Picked on April 06 at $ 51.25
Change since picked: - 0.09
Earnings Date 04/23/08 (unconfirmed)
Average Daily Volume = 774 thousand

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Core Labs - CLB - close: 133.06 chg: +2.56 stop: 118.99

Another record high for crude oil lifted the oil stocks and CLB rose almost 2%. We don't see any changes from our previous comments. The stock looks very short-term overbought here having gone almost straight up for close to two weeks in a row. We want to wait for the dip. Currently our suggested entry point to buy calls is the $123.50-120.00 zone. We're sticking with that entry zone for now but we might raise it toward the $125 region. If triggered at $123.50 our short-term target will remain $130 (actually 129.75) but we'll add a second target of $139-140. We still do not want to hold over earnings in late April. FYI: Truly nimble traders could try and scalp a few points with a put play on the expected pull back (maybe to $125).

PPicked on April xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 04/23/08 (unconfirmed)
Average Daily Volume = 240 thousand

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CONSOL Energy - CNX - cls: 76.77 chg: -1.44 stop: 69.49

Negative comments from an HSBC analyst let some air out of the coal rally today. Overall we don't see any changes from our prior comments. We're going to stick to our plan for now and suggest readers buy dips in the $73.50-72.50 zone. The Point & Figure chart is very bullish with a $95 target. We are listing two targets. Our first target is the $79.75-80.00 range. Our second target is the $84.00-85.00 zone. More aggressive traders might want to aim for $90. Remember, we do not want to hold over the late April earnings report.

Picked on April xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 04/24/08 (unconfirmed)
Average Daily Volume = 3.7 million

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Fluor - FLR - close: 151.13 chg: -1.34 stop: 143.45

FLR slipped about 0.8% on Wednesday. Given this market environment readers may want to wait for another dip in the $146-145 zone before considering new bullish positions. We have two targets. Our first target is the $159.00-160.00 zone. Our second target is the $168.00-170.00 zone. We do not want to hold over earnings in early May. FYI: The P&F chart is bullish with a $184 target.

Picked on April 01 at $146.50 *triggered
Change since picked: + 4.63
Earnings Date 05/07/08 (unconfirmed)
Average Daily Volume = 2.3 million

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Hovnanian - HOV - close: 10.96 chg: -1.00 stop: *varies*

Homebuilders got clobbered again. The DJUSHB index lost 4.7%. Shares of HOV plunged more than 8.3% and stalled right at the 200-dma. The stock is nearing our suggested entry point in the $10.50-10.00 zone. Our readers might want to narrow that to $10.20-10.00 or $10.15-10.00. We are going to adjust our stop from 9.49 to $9.64. We are listing two potential entry points and stops for each entry. If HOV rallies from here we're suggesting readers buy calls at $13.25 with a wide stop loss at $10.99. If HOV pulls back from here then we suggest readers buy calls in the $10.50-10.00 zone with a stop loss at $9.64. If triggered at $13.25 our first target is the $16.90-17.00 range. Our second target is $19.85-20.00. If triggered near $10 our first target is $14.50-15.00 and our second target would be near $20. Remember, this is an aggressive play. The stocks have seen a lot of whipsaws over the last several weeks.

Picked on April xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 05/29/08 (unconfirmed)
Average Daily Volume = 4.1 million

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Lincoln Elec. - LECO - cls: 69.99 chg: -0.91 stop: 67.90

LECO could not avoid the market weakness but shares are still holding on to support near $70.00 and its 200-dma. We are still suggesting that readers might want to wait for a dip near $69.50 so LECO can "fill the gap" as a new bullish entry point. We have two targets. Our first target is the $74.85-75.00 range. Our second target is the $78.00-80.00 zone. The Point & Figure chart is bullish with a $91 target. We do not want to hold over the late April earnings report.

Picked on April 07 at $ 73.73 *triggered/gap higherr
Change since picked: - 3.74
Earnings Date 04/24/08 (unconfirmed)
Average Daily Volume = 233 thousand

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3M Co. - MMM - close: 79.59 chg: -0.29 stop: 78.45

MMM continues to oscillate sideways. We're still waiting for a breakout over resistance. We are suggesting readers use a trigger to buy calls at $81.75. There is potential resistance near $85.00 and its 200-dma but our target is the $87.00-87.50 zone. We do not want to hold over the late April earnings report.

PPicked on April xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 04/24/08 (unconfirmed)
Average Daily Volume = 3.9 million

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Arcelor Mittal - MT - close: 85.33 chg: -0.12 stop: 78.24

We would consider MT's minor 12-cent loss today as a sign of relative strength. The stock actually hit another all-time high this morning. Our target is the $89.00-90.00 zone. The P&F chart is very bullish and just saw its price target jump from $101 to $113 this past week.

Picked on March 31 at $ 82.03 *triggered/gap open
Change since picked: + 3.30
Earnings Date 05/15/08 (unconfirmed)
Average Daily Volume = 4.1 million

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Potash Corp. - POT - close: 175.89 chg: -0.26 stop: 149.75

Shares of POT continue to show relative strength. The stock actually hit a new high this morning at $179.29. We remain bullish on POT but want to wait for a pull back. More aggressive traders may want to buy dips near $170. We are suggesting readers buy calls on a dip in the $167.50-165.00 zone. We are playing with a wide stop loss because the stock can be so volatile. More conservative traders might want to try and play with a stop closer to $160 instead. Our first target is the $179.50-180.00 zone. Our second target is the $188.00-190.00 zone. More aggressive traders could aim for the $200 region. FYI: The P&F chart is bullish with a $218 target.

Picked on April 03 at $ xx.xx <--see TRIGGER
Change since picked: + 0.00
Earnings Date 04/24/08 (unconfirmed)
Average Daily Volume = 7.7 million

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Research In Motion - RIMM - cls: 118.16 chg: -2.82 stop: 116.49

Ouch! RIMM almost completely erased Tuesday's gains with a 2.3% decline today. A bounce from here would be another entry point but readers may want to wait for a move past today's high near $120.85 or yesterday's high near $121.00 before initiating positions. We're listing a short-term target at $125.00 and a secondary target in the $129.00-130.00 zone. FYI: The Point & Figure chart is bullish with a $130 target.

Picked on April 08 at $120.98
Change since picked: - 2.82
Earnings Date 06/26/08 (unconfirmed)
Average Daily Volume = 22.3 million

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United States Oil - USO - close: 88.90 chg: +1.71 stop: 82.45

The weekly oil inventory report came out this morning. Wall Street was expecting a build of 2.4 million barrels and the report came in with a drop of 3.2 million barrels. This surprise sent crude oil to new all-time highs. The USO responded with a 1.9% gain and a new all-time high. We don't see any changes from our previous comments. Our first target is the $92.50 mark. Our second, more aggressive target is the $97.50-100.00 zone.

Picked on April 07 at $ 86.49 *triggered/gap higher
Change since picked: + 2.41
Earnings Date 00/00/00 (unconfirmed)
Average Daily Volume = 5.4 million
 

Put Updates

Ambac Fincl. - ABK - cls: 5.65 change: -0.38 stop: n/a

Financials stocks were a significant portion of today's market weakness. ABK under performed its peers with a 6.3% decline. The stock has broken down to new multi-week lows and looks poised to test its multi-year lows near $5.00-4.50 soon. We are not suggesting new bearish positions in ABK. This remains a very speculative play. We will definitely hold over the April earnings if we get the chance. Previously we had been suggesting the May out-of-the money puts ($5.00 and $2.50 strikes). FYI: After the closing bell tonight it was disclosed that J.P.Morgan (JPM) had significantly decreased its stake in shares of ABK.

Picked on January 27 at $ 11.54
Change since picked: - 5.89
Earnings Date 04/24/08 (unconfirmed)
Average Daily Volume = 10.9 million

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Fannie Mae - FNM - close: 28.12 chg: -0.88 stop: 32.31

FNM continues to sink and shares broke down under the 50-dma today. The stock posted a 3% decline albeit on very low volume. We do not see any changes from last night's comments. We are listing two targets. Our first target is the $25.25-25.00 zone. Our second target is the $21.00-20.00 zone.

Picked on April 08 at $ 29.00
Change since picked: - 0.88
Earnings Date 05/27/08 (unconfirmed)
Average Daily Volume = 26.5 million

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Humana Inc - HUM - cls: 42.76 chg: -2.44 stop: 46.21 *new*

The rally in HUM was short lived. The stock erased yesterday's rebound with a 5.4% sell-off today. We remain bearish on the stock. If you think HUM will breakdown under $40.00 then today's move looks like a new entry point and we'd consider a stop around $45.25. Speaking of stops we are going to adjust our stop loss to $46.21. Our target is the $40.50-40.00 zone. More aggressive traders may want to aim lower. Currently the P&F chart is so bearish it points to a target of zero ($0.00).

Picked on March 30 at $ 45.20
Change since picked: - 2.44
Earnings Date 04/28/08 (unconfirmed)
Average Daily Volume = 4.4 million

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Juniper Networks - JNPR - cls: 22.97 chg: -0.46 stop: 24.55

JNPR continued to slip and the stock did hit our suggested entry point to buy puts at $22.95. The play is now open. Our target is the $20.15-20.00 zone. The move under $23.00 has reversed the P&F chart into a new sell signal with a $16.00 target. We do not want to hold over the late April earnings report.

Picked on April 09 at $ 22.95 triggered
Change since picked: + 0.02
Earnings Date 04/24/08 (unconfirmed)
Average Daily Volume = 11.5 million

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MBIA Inc. - MBI - close: 11.97 change: -1.02 stop: n/a

We were expecting some weakness in MBI and the stock plunged 7.8% today. We are not suggesting new bearish positions at this time. We had been suggesting the out-of-the-money May puts (7.50, 5.00 and 2.50 strikes).

Picked on January 27 at $ 14.20
Change since picked: - 2.23
Earnings Date 04/24/08 (unconfirmed)
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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Goldman Sachs - GS - cls: 174.14 chg: -4.76 stop: n/a

Weakness in financials pushed shares of GS to a 2.6% loss and back under its 50-dma. The move back across the $175.00 mark was a great opportunity to open new strangle positions. Speaking of opening strangle positions we had a reader email ask us what we meant by this statement:

"We would still consider strangle positions in the $173.50-178.50 zone (more aggressive traders could widen that entry zone to $170-180)."

I want to apologize if that doesn't make sense. Your entry point in any options play is always crucial. When trying to open a strangle position your entry point might have a little more leeway but remains critical to your success. Normally we want to try and pick an entry near important support or resistance and strike price. However, stocks are seldom cooperative if we use a specific price like, "open strangle positions when GS hits $175.00" so we list a range where GS could trade, in this case $173.50-178.50, where we would consider opening strangle positions. GS could trade anywhere in that range and we would consider launching a strangle.

My comment about more aggressive traders using a $170-180 range to open positions has the same implications but we're moving farther away from the $175 area and traders opening strangles with the options we suggested are going to have a more challenging time trying to keep their investment neutral if GS is trading closer to $180 or $170 than $175. A strangle is a neutral strategy. We do not care what direction the stock goes as long as it moves far enough in one direction to make one side of the strangle profitable (after covering our entire initial investment).

When we listed this play, with GS near $175, the options we picked were trading about the same price so we could keep our investment balanced with relatively equal capital on both the call side and put side. As GS moves away from $175 the prices of the call and put options are no longer equal and a trader will have to do some juggling to try and keep their investment neutral with relatively equal amounts on both sides of the trade. If you're not equally balanced (we're talking capital not contracts) on both side of the trade then it starts to have a bullish or bearish bias. Maybe that's okay with you but we are trying to play this with a neutral bias. As always you could always modify any of our plays by picking your own options in a different month or at a different strike price.

The options we suggested for this strangle were the May $190 calls (GPY-ER) and the May $160 puts (GPY-QL). Our estimated cost was $8.70. We want to sell if either option trades at $14.50 or higher.

Picked on April 06 at $175.40
Change since picked: - 1.26
Earnings Date 06/12/08 (unconfirmed)
Average Daily Volume = 14.5 million
 

Dropped Calls

Essex Prop. Trust - ESS - cls: 112.55 chg: -3.35 stop: 114.45*new*

The volatile shares of REIT stock ESS have broken down through support near $115 and its four-week rising channel. Yesterday we raised our stop loss to reduce our risk with a stop at $114.45. ESS quickly tagged our stop loss this morning. We would keep an eye on potential support near $110 and its 200-dma.

Picked on March 24 at $115.50 *triggered /stopped 114.45
Change since picked: - 2.95
Earnings Date 05/05/08 (unconfirmed)
Average Daily Volume = 408 thousand
 

Dropped Puts

None
 

Dropped Strangles

None
 

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