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Call Updates

Carbo Ceramics - CRR - close: 49.52 change: +0.16 stop: 46.45 *new*

CRR may have out performed the markets with a gain today but the action was bearish this afternoon. CRR hit an intraday high of $51.17 before completely reversing. This move looks like a failed rally pattern and a bearish reversal even though the short-term trend of higher lows is still intact. We are not suggesting new positions. More conservative traders may want to exit early right now to avoid any losses. We're moving the stop loss to $46.45. If CRR closes under its 10-dma around $48.50 we might exit early. We're aiming for the $52.00-52.50 zone.

Picked on May 11 at $ 47.45
Change since picked: + 2.07
Earnings Date 04/24/08 (confirmed)
Average Daily Volume = 303 thousand

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Fortune Brands - FO - close: 70.18 change: -0.85 stop: 69.45

FO was unable to avoid the market-wide sell-off but the stock fared better than most. Shares dipped to $69.78 before bouncing back above $70.00 to close with a 0.9% loss. The $70.00 level is supposed to be support so a bounce from here could be used as a new entry point but you might want to consider a stop loss under today's low. Our target is the $74.00-75.00 range. The 200-dma is technical resistance near $74.50. The P&F chart is bullish with a $95 target.

Picked on May 07 at $ 70.05 *triggered
Change since picked: + 0.13
Earnings Date 04/24/08 (confirmed)
Average Daily Volume = 971 thousand

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Harsco - HSC - close: 61.86 change: -1.08 stop: 59.85

HSC gave up 1.7% and has broken down under short-term support near $62.00. The intraday chart is suggesting a pull back to the $60.00 level. More conservative traders may want to exit early to avoid any losses. We're not suggesting new positions at this time. Our target is the $64.50-65.00 range but more aggressive traders may want to aim higher.

Picked on May 01 at $ 60.38
Change since picked: + 1.48
Earnings Date 04/22/08 (confirmed)
Average Daily Volume = 613 thousand

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IHOP Corp. - IHP - close: 48.23 change: -3.05 stop: 49.49

Shares of IHP fell flat as a pancake today. The stock plunged 5.9% and broke down below the $50.00 level and its 50-dma. We didn't see anything out of the ordinary that might have accounted for this relative weakness other than some headlines regarding its sale-lease back deal with its Applebees restaurants. We're still on the sidelines waiting for a breakout over resistance. Right now our plan is to buy calls if IHP trades at $53.75. Traders might want to switch directions and buy puts if IHP breaks under the $45.00 level. If triggered at 53.75 our target is the $59.50-60.00 zone. The P&F chart is bullish with a $68 target. FYI: The most recent data listed short interest at more than 26% of the very small 14.8 million-share float. That's about two weeks worth of short interest so if IHP breaks out it could see a huge squeeze. Note: we have to label this a more aggressive play because the option spreads are so wide.

Picked on May xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 04/27/08 (unconfirmed)
Average Daily Volume = 326 thousand

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iShares Russ.2000 - IWM - cls: 72.65 chg: -1.05 stop: 71.45

Small cap stock ETF, the IWM, lost 1.4% and did so on above average volume. This index equity might find support near $72.00 but we're not suggesting new positions at this time. Our multi-week target is the $77.50-80.00 zone. The P&F chart is bullish with an $87 target.

Picked on April 28 at $ 72.55 *triggered
Change since picked: + 0.10
Earnings Date 00/00/00
Average Daily Volume = 84.6 million

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Lufkin Industries - LUFK - cls: 79.96 chg: -1.02 stop: 77.85

Right on cue LUFK has provided a dip to the 10-dma. Now do we have the faith to buy it? Personally, given the tone of the market, I would wait. We've been suggesting potential entry points in the $80-78 range. LUFK might offer us a better entry point near $78.00 soon. So wait and watch and keep on top of those stops. The short-term target is $84.75-85.00. The P&F chart is bullish with an $87 target.

Picked on May 18 at $ 80.59
Change since picked: - 0.63
Earnings Date 07/17/08 (unconfirmed)
Average Daily Volume = 209 thousand

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Reliance Steel - RS - close: 66.28 chg: -1.09 stop: 59.99

RS succumbed to the market weakness and lost 1.6%. We're still waiting for a pull back toward support. Our suggested entry point is a pull back into the $64.75-64.00 zone. If triggered we're setting two targets. Our first target is the $69.50-70.00 range. Our secondary, more aggressive target is the $73.00-75.00 range. The P&F chart is bullish with a $73 target.

Picked on May xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 04/17/08 (confirmed)
Average Daily Volume = 851 thousand
 

Put Updates

Apollo Group - APOL - close: 43.88 chg: -1.51 stop: 49.01 *new*

APOL continues to get bad grades in the market. The stock lost another 3.3% and closed near its lows for the day. We are adjusting our stop loss to $49.01. Our target is the $40.50-40.00 zone.

Picked on May 18 at $ 46.71
Change since picked: - 2.83
Earnings Date 06/26/08 (unconfirmed)
Average Daily Volume = 5.4 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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McDonald's - MCD - close: 58.78 chg: -0.90 stop: n/a

MCD continues to slip. The stock has fallen under what looked like short-term support near $59.00. We are not suggesting new strangle plays at this time. The options we suggested were the June $62.50 calls (MCD-FZ) and the June $57.50 puts (MCD-RY). Our estimated cost was $1.10. We want to sell if either option hits $1.65 or higher.

Picked on May 18 at $ 60.53
Change since picked: - 1.75
Earnings Date 07/24/08 (unconfirmed)
Average Daily Volume = 7.5 million
 

Dropped Calls

Alliant Techsystems - ATK - cls: 108.43 chg: -2.14 stop: 109.45

The selling in ATK never let up. It looks like the afternoon bounce from Tuesday was merely a speed bump on the way down. ATK opened lower and quickly fell through round-number support at the $110 level. Shares hit our stop loss at $109.45 and eventually settled with a 1.9% decline under its 200-dma. Today's move is both a breakdown from its three-week consolidation pattern and its three-month up trend. Monday's spike higher, looking back, was clearly a bull trap.

Picked on May 19 at $112.80 *stopped out 109.45
Change since picked: - 4.37
Earnings Date 07/31/08 (unconfirmed)
Average Daily Volume = 234 thousand

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Intl.Bus.Mach. - IBM - cls: 123.62 chg: -1.56 stop: 123.49

The DJIA fell 1.7% and Dow-component IBM followed with a 1.2% drop of its own. Shares of IBM actually produced a bearish failed rally early this morning with the spike to $126.40. The afternoon market weakness pulled IBM under the $124 level and shares hit our stop loss at $123.49. The five-month up trend is still intact and a bounce in the $122 area might be a new bullish entry point but watch those stops! IBM had already exceeded our early target near $125. The stock hit $128.83 on May 14th but earlier in the month we had raised our secondary target from $128.00 to $129.50.

Picked on April 30 at $120.75 */1st target exceeded
Change since picked: + 2.87
Earnings Date 04/16/08 (confirmed)
Average Daily Volume = 8.8 million

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Joy Global - JOYG - close: 77.93 chg: -2.23 stop: 76.90

We think it's time to hit the eject button on our JOYG call play. The stock has been flirting with a breakout over $82.00 but just can't see to make it. Now the stock is on the verge of breaking down below its multi-week trend of higher lows. The long-term trend is still up but JOYG could pull back to $70.00 and still keep the long-term trend intact. We are suggesting an early exit to lock in a gain. JOYG has exceeded our initial target near $80.00 but never made it to our secondary target at $84.00.

Picked on April 16 at $ 72.55 */ fist target exceeded
Change since picked: + 5.38
Earnings Date 05/29/08 (confirmed)
Average Daily Volume = 2.3 million
 

Dropped Puts

United States Oil Fund - USO - cls: 108.31 chg: +4.01 stop: 105.55

Ouch! Once again oil has just steamrolled over the bears. The USO jumped toward $105 this morning, dipped toward $104 ahead of the oil inventory report and then just exploded higher. The market was expecting a build in oil inventories but instead there was a substantial decline. This send crude oil toward $133 a barrel and the USO vaulted higher with a 3.8% gain. Yesterday we had adjusted our stop loss to $105.55. This is a GREAT example on how dangerous it is to try and call a top in something. There were some classic signs of a top just a few days ago but there always seems to be some sort of news to keep pushing oil higher. What we are seeing is essentially a short squeeze. The most recent data listed speculative shorts in oil at the highest levels since 1986. The put call ratio on the USO was around 2-to-1. With so many people betting on a pull back in oil the short covering just feeds on itself.

Picked on May 19 at $102.80
Change since picked: + 5.51
Earnings Date 00/00/00
Average Daily Volume = 7.8 million
 

Dropped Strangles

None
 

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