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Call Updates

Peabody Energy - BTU - close: 78.77 change: -2.63 stop: 73.92

Wow! Shares of BTU have been very volatile lately. The stock closed with a 3.2% loss but that was after bouncing from its $77.04 low. The trend of higher lows is still intact but we're not suggesting new bullish positions at this time. BTU has exceeded our first target near $80 multiple times. Our second target is the $84.00-85.00 zone.

Picked on June 01 at $ 73.92 /1st target exceeded 79.75
Change since picked: + 4.85
Earnings Date 07/24/08 (unconfirmed)
Average Daily Volume = 5.8 million
 

Put Updates

Emerging Markets 50 ADR - ADRE - cls: 52.29 chg: -1.53 stop: 55.85*new*

The ADRE under performed the markets with a 2.8% plunge. This emerging markets ETF has now closed under its 200-dma and is testing its 100-dma. After a three-day decline it's probably time to expect a little oversold bounce. We are adjusting our stop loss to $55.85. We are aiming for the $51.00-50.00 zone.

Picked on June 03 at $ 54.69
Change since picked: - 2.40
Earnings Date 00/00/00
Average Daily Volume = 448 thousand

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Caterpillar - CAT - close: 80.10 change: -0.71 stop: 84.05

CAT did not see much action today. The stock bounced around the $80-81 zone. We don't see any changes from our previous comments. We want to buy puts on a bounce but we are listing two entry points. Our preferred entry point is to buy puts on a bounce in the $81.50-82.00 zone. However, if CAT does not bounce then we're setting a secondary entry point at $79.45. If triggered our target is the $75.25 mark. CAT will probably find some support near $75.00 and its 200-dma. The P&F chart is bearish with a $74 target.

Picked on June xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 07/18/08 (unconfirmed)
Average Daily Volume = 6.2 million

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DaVita Inc. - DVA - close: 49.69 chg: -0.09 stop: 53.01

It can be really tough to have patience for the right entry point. Right now DVA looks ready to crumble. The intraday bounce failed at $50.15. More aggressive traders may want to open positions now anyway. We are going to stick to our plan and wait for a bounce. Our suggested entry point to buy puts is the $51.00-52.00 zone. If triggered we have two targets. Our first target is 47.75-47.50. Our second target is the $45.15-45.00 zone. The P&F chart is bearish with a $45 target. FYI: Last month DVA announced a $250 million stock buy back program. At $50 a share that's about 5 million shares. DVA has about 104 million shares outstanding.

Picked on June xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 07/31/08 (unconfirmed)
Average Daily Volume = 606 thousand

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Electronic Arts - ERTS - close: 46.16 chg: -0.77 stop: 49.41*new*

ERTS continues to show relative weakness. The stock posted another 1.6% loss and on above average volume. We are adjusting our stop loss to $49.41, which is just above Friday's high. More conservative traders may want to use a tighter stop. If ERTS rebound it should find resistance near $48.00. Our target is the February lows near $44.50-44.00.

Picked on June 06 at $ 47.75 *triggered
Change since picked: - 1.59
Earnings Date 07/31/08 (unconfirmed)
Average Daily Volume = 3.7 million

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3M Co. - MMM - close: 76.00 chg: +0.18 stop: 77.65

MMM is still trying to bounce. I suspect the bounce will fail soon but today's candlestick was actually a minor bullish engulfing candlestick pattern. Bears need to be careful here. Since we're not seeing any failed rally patterns readers can wait for a new relative low under $74.85 as a new entry point. We have two targets. Our first target is the $70.25-70.00 zone. Our secondary target is the $67.00-65.00 range. The P&F chart is bearish with a $69 target. FYI: If you are aiming for the $67 target then you might want to consider the October puts.

Picked on June 06 at $ 74.95 *triggered
Change since picked: + 1.05
Earnings Date 07/24/08 (unconfirmed)
Average Daily Volume = 4.0 million

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Terex Corp. - TEX - close: 66.04 change: -0.48 stop: 72.05

Again, it can be tough to have patience and wait for the right entry point. TEX is still flirting with its 100-dma. Shares hit a new relative low this morning and bounced. We are sticking to our plan. We are suggesting readers buy puts on a bounce back into the $69.00-70.00 zone. Our suggested stop loss is $72.05. If triggered we have two targets. Our first target is $65.25. Our second target is $61.50. The P&F chart is bearish with a $61 target.

Picked on June xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 07/23/08 (unconfirmed)
Average Daily Volume = 1.7 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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Amgen Inc. - AMGN - close: 43.82 chg: -0.48 stop: n/a

Lack of upward movement is very bad news for our June options. We don't have much time left and need to see AMGN above $45.00 or under $40.00. We have less than two weeks left for June strikes before they expire and the erosion is going to pick up speed. We are not suggesting new positions at this time. We have suggested a July strangle and a more aggressive June strangle. The options in the July strangle are the July $45 calls (AMQ-GI) and the July $40 puts (AMQ-SH). Our estimated cost for the July strangle was $1.65. We want to sell if either option hits $3.50. The options in the June strangle are the June $45.00 calls (AMQ-FI) and the June $40.00 puts (AMQ-RH). Our estimated cost on the June strangle was $0.56. We want to sell if either option hits $1.10 or more.

Picked on May 22 at $ 42.77
Change since picked: + 1.05
Earnings Date 07/24/08 (unconfirmed)
Average Daily Volume = 6.7 million

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McDonald's - MCD - close: 59.77 chg: +0.46 stop: n/a

After coming so close to success it looks like our MCD strangle may be dead following this week's sudden reversal higher. The stock rallied again today and hit $60.41 intraday. We've got less than two weeks left before June options expire. We are not suggesting new positions. 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: - 0.76
Earnings Date 07/24/08 (unconfirmed)
Average Daily Volume = 7.5 million

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Tyco Intl. - TYC - close: 43.54 change: +0.17 stop: n/a

TYC dipped to its 100-dma and bounced. However, the afternoon bounce struggled at the $44 level so the trend still looks lower. We are not suggesting new strangle positions in TYC at this time. The options we suggested were the July $47.50 calls (TYC-GW) and the July $42.50 puts (TYC-SV). Our estimated cost was $1.30. We want to sell if either option hits $1.95 (50% gain).

Picked on June 03 at $ 44.89
Change since picked: - 1.35
Earnings Date 08/05/08 (unconfirmed)
Average Daily Volume = 2.9 million
 

Dropped Calls

Lehman Brothers - LEH - close: 27.50 change: -1.98 stop: 27.75

We always warn readers about trying to pick a bottom in a stock and this is what happens when you do. The big news and the huge volume yesterday looked like LEH had put in a short-term bottom. That was not the case. This morning before the opening bell a couple of brokers downgraded LEH. Shares opened at $28.60 and ended the session with a 6.7% loss. Our stop loss was at $27.75.

Picked on June 09 at $ 29.48 /stopped out 27.75
Change since picked: - 1.98
Earnings Date 07/27/08 (unconfirmed)
Average Daily Volume = 26.5 million

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Molson-Coors Brewing - TAP - cls: 57.72 chg: -0.91 stop: 56.45

We are running out of patience with TAP. The trend is still upward and there is no reason you couldn't keep you bullish position open. However, as option traders, having a stock moving sideways is deadly. We're starting to wonder if the next move might be lower. Investors may want to consider some sort of credit-call spread. We were targeting the $64.00 level.

Picked on May 23 at $ 58.51 *triggered
Change since picked: - 0.79
Earnings Date 08/07/08 (unconfirmed)
Average Daily Volume = 1.1 million
 

Dropped Puts

None
 

Dropped Strangles

None
 

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