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Call Updates

Adobe Systems - ADBE - close: 45.89 chg: +27 stop: 41.50

Shares of ADBE displayed some relative strength versus the overall market but we would not be too bullish here. The stock has produced what is arguably a minor double-top pattern, a bearish development, with the two failed rallies under $46.50 in just the last two sessions. It's a lot easier to see the potential double top on an intraday chart. We are not suggesting new bullish positions at this time and more conservative traders may want to take some money off the table. Our target is the $47.50-50.00 zone. The Point & Figure chart is positive with a $71 target.

Picked on August 05 at $ 43.34
Change since picked: + 2.55
Earnings Date 09/16/08 (unconfirmed)
Average Daily Volume = 6.5 million

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Illumina - ILMN - cls: 90.86 chg: +0.49 stop: 86.95 *new*

We are really tempted to open bullish positions right here. ILMN out performed the broader market with a 0.5% gain on Wednesday. The stock closed above short-term technical resistance at its simple 10-dma. However, shares failed at the $91.00 level twice late this afternoon. More aggressive traders may want to jump in now. We're going to stick to our plan and our suggested entry point to buy calls at $91.55. Please note that we're changing our stop loss to $86.95. More conservative traders may want to use a stop loss closer to the $88.00 level. If triggered we have two targets. Our first target is $95.25. Our second target is $99.50. FYI: ILMN has a 2-for-1 stock split scheduled for September 23rd. Traders might also want to note that ILMN's short interest is about 19% of the 50 million-share float. That's high enough to spark some short squeezes.

Picked on August xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 07/27/08 (unconfirmed)
Average Daily Volume = 1.2 million

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Research In Motion - RIMM - cls: 126.90 chg: -1.39 stop: 122.50

RIMM suffered a third session of profit taking. Traders bought the dip near support around $125.00 as we expected. Unfortunately, the failed rally intraday under $130.00 is short-term bearish. RIMM should have pretty decent support around $125 with its 10-dma, 50-dma and 100-dma converging there but if the NASDAQ doesn't bounce on Thursday then RIMM could see more trouble. We've been suggesting that readers wait for a dip near $125 as a new entry point and we got it today. More conservative traders might want to adjust their stops closer to the $125 level. We're going to leave our stop loss at $122.50 for now. RIMM has already exceeded our early target at $129. Our secondary target is $137.00.

Picked on July 31 at $120.50 /1st target exceeded
Change since picked: + 6.40
Earnings Date 09/25/08 (unconfirmed)
Average Daily Volume = 18.6 million

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CBOE Volatility Index - VIX - close: 21.55 chg: +0.38 stop: n/a

The VIX is starting to show signs of life again. It is trying to breakout over the trendline of lower highs. Remember, this is a very aggressive and speculative bet that with all the troubles this market (and economy) is seeing that there will be another significant sell-off before October options expiration. Normally when the market sees a super sharp sell-off the VIX spikes to the 30.00 level and beyond. It would be tempting to consider new bullish call positions now but we would wait for a new rise over 22.50 before considering new positions. We were suggesting the October calls. Our exit target is 29.75 on the VIX.

Picked on August 03 at $ 22.57
Change since picked: - 1.02
Earnings Date 00/00/00
Average Daily Volume = x million
 

Put Updates

Bank of Amer. - BAC - cls: 28.86 change: -2.27 stop: 34.15

Shares of BAC collapsed for a second day in a row. Financial stocks were hit hard by continuing worries over the housing market, mortgage losses and the current credit crisis. Many believe that the expiration of the temporary rule to limit short selling in certain stocks also played a major factor in the financials' downturn today. BAC is facing new troubles from rising lawsuits against Countrywide's lending practices. BAC recently acquired Countrywide as the mortgage lender struggled under the collapsing housing market. Shares of BAC lost more than 7% today and broke down under the $30.00 level. The MACD on the daily chart has finally rolled over into a new sell signal. We would like to lower the stop loss but Monday's high around $34.00 and we want BAC to have some room to maneuver. More conservative traders may want to tighten their stops anyway. Don't be surprised to see an oversold bounce near $28.00 and its simple 50-dma. We have two targets. Our first target is $28.00. Our second target is $25.50.

Picked on August 07 at $ 31.52
Change since picked: - 0.39
Earnings Date 10/16/08 (unconfirmed)
Average Daily Volume = 90.4 million

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Focus Media - FMCN - cls: 24.38 chg: +0.47 stop: 26.01*new*

FMCN bounced for the second day in a row. This oversold bounce may have more life to it than previously thought. If you study the intraday chart it looks like FMCN could be setting up for a rebound back toward $26.00 or the simple 50-dma, where it has failed so many times in the past. If we had more time we would adjust the stop loss to just above the simple 50-dma (currently around $27.60) and we would suggest buying puts on another failed rally in the $26.00-27.00 zone. Unfortunately, we don't have much time. FMCN is due to report earnings on August 17th. We do not want to hold over the report so we're planning to exit at the closing bell this Friday, August 15th. Given our time frame we're adjusting the stop loss to $26.05 and more conservative traders may want to use a tighter stop. Our target has been the $20.50 mark.

Picked on August 10 at $ 25.00
Change since picked: - 0.62
Earnings Date 08/17/08 (confirmed)
Average Daily Volume = 3.9 million

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Freddie Mac - FRE - close: 5.55 change: +0.18 stop: 8.15*new*

News that the short-term limitation on shorting certain financial stocks, FRE being one of them, did not help the bulls today. The financial sector under performed yet again and FRE dipped to $5.10 intraday. The bounce back into the green late this afternoon was a bit of a surprise but FRE was approaching oversold levels. Readers will want to strongly consider an early exit right to take some money off the table. Up until now we have been playing without a stop loss since this was more of a lottery ticket style of play. We're going to change that with a stop loss at $8.15 on FRE's share price. We are not suggesting new bearish positions at this time. However, the situation has not changed. There are many on Wall Street that believe FRE and FNM will not be able to survive the housing crisis without the government stepping in. The big fear is that if the U.S. government does step in they will wipe out the shareholders. Our short-term target has been the $5.00 level. More aggressive traders may want to aim lower.

Picked on July 20 at $ 9.18
Change since picked: - 3.63
Earnings Date 08/06/08 (confirmed)
Average Daily Volume = 45.5 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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Apple Inc. - AAPL - close: 179.30 chg: +2.57 stop: n/a

AAPL continues to look strong albeit a little short-term overbought with the stock's sixth gain in the last seven sessions. News that Best Buy (BBY) would start carrying the new 3G iPhone soon gave shares of AAPL a boost. Yet the stock can't quite get over resistance at the $180.00 level and with only two days left before options expiration AAPL might be stuck there near the $180 strike price. Due to our dwindling time frame we recently adjusted our exit price to $4.00 on the options. The August $180 calls traded near $2.00 intraday. If AAPL can get over $180 tomorrow we have a chance to recoup some of our cost. If not, this play is going to be a total bust. More conservative traders may want to exit early now. We are not suggesting new strangles on AAPL at this time. The options we suggested were the August $180 calls (APV-HP) and the August $150 puts (APV-TJ). Our estimated cost is $8.90.

Picked on July 20 at $165.15
Change since picked: +14.15
Earnings Date 07/21/08 (confirmed)
Average Daily Volume = 31.7 million

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DIAMONDS - DIA - close: 115.40 chg: -1.17 stop: n/a

Stocks turned against us on Wednesday and the Dow Jones Industrial Average posted another triple-digit loss. A bounce today could have pushed the calls to our exit price. Now we have to make some adjustments. If you're feeling optimistic the DIA has pulled back to its bullish trendline of higher lows. If the index is going to bounce this is the spot to do it. The bad news is that we only have two trading days left for August options. Another decline like today and the call values will fall toward zero. At this time we're going to gamble on a bounce but we're adjusting our suggested exit price to $2.00. More conservative traders may want to exit immediately. We're not suggesting new strangle positions at this time. The options we suggested were the August $115 calls (DIA-HK) and the August $109 puts (DIA-TE). Our estimated cost is $4.35.

Picked on July 07 at $112.21
Change since picked: + 3.19
Earnings Date 00/00/00
Average Daily Volume = 15.5 million

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Lehman Brothers - LEH - close: 15.57 chg: -0.64 stop: n/a

The fear of financials pushed shares of LEH to another 3.9% loss. Technical traders will note that the MACD on the daily chart is nearing a new sell signal. We have several weeks left before September options expire and need to see LEH significantly above $24.00 or under $10.00. We're not suggesting new positions at this time. The options we suggested were the September $24.00 calls (LYH-IR) and the September $10.00 puts (LYH-UB). Our estimated cost is $2.15. We want to sell if either option hits $3.50 or higher.

Picked on July 27 at $ 17.05
Change since picked: - 1.48
Earnings Date 09/18/08 (unconfirmed)
Average Daily Volume = 63 million

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Washington Mutual - WM - close: 4.12 chg: -0.18 stop: n/a

Financials continue to struggle and shares of WM dipped to $4.01 intraday. The August $4.00 put hit an intraday high of 20 cents. More conservative traders may want to exit immediately. We are going to risk it and gamble on the financials and WM continuing to sink into the weekend. If WM can breakdown under the $4.00 level then the August $4.00 put has a chance to really climb higher. Bear in mind that our exit price is only 40-cents as we attempt to recoup some of our capital. More aggressive traders may want to aim for more. We are not suggesting new positions at this time. The options we suggested were the August $8.00 calls (WM-HV) and the August $4.00 puts (WM-TH). Our estimated cost is $0.72.

Picked on July 20 at $ 5.92
Change since picked: - 1.80
Earnings Date 07/22/08 (confirmed)
Average Daily Volume = 57 million
 

Dropped Calls

None
 

Dropped Puts

None
 

Dropped Strangles

Popular Inc. - BPOP - close: 7.51 change: -0.14 stop: n/a

The recent reversal in financials has been our undoing in this BPOP strangle. The stock got so close to lifting the calls to a profitable level but just didn't quite make it. We only have two days left before August options expire. There is still a chance that BPOP could charge higher but we're closing the play early. More aggressive traders may want to risk it. Another rise back toward the recent highs ($8.20) should be enough to lift the August $7.50 calls to our breakeven point around $0.65. It is up to the individual trader when they want to exit. Do you jump out now or gamble on a bounce in the next two days? The options we listed were the August $7.50 calls (BQW-HU) and the August $5.00 puts (BQW-TA). Our estimated cost was $0.65.

Picked on July 16 at $ 5.82 /exit 7.51
Change since picked: + 1.69
Earnings Date 07/18/08 (confirmed)
Average Daily Volume = 3.4 million

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Corning Inc. - GLW - close: 20.93 chg: -0.51 stop: n/a

GLW turned lower again and the three-day candlestick pattern looks like another bearish reversal. This stock has gone nowhere for the last several weeks with multiple fake breakouts and breakdowns to lure in both bulls and bears. We should have taken our own suggestion to exit after the stock failed to move following its earnings report. There are only two days left before August options expire. At this point readers may want to let it ride since the options have been cut to zero. We are dropping GLW from the newsletter. If GLW does miraculously move don't hesitate to exit if either option suddenly springs to life.
The options we suggested were the August $22.50 calls (GLW-HX) and the August $17.50 puts (GLW-TW). Our estimated cost is $0.75.

Picked on July 10 at $ 20.16 /exit 20.93
Change since picked: + 0.77
Earnings Date 07/30/08 (confirmed)
Average Daily Volume = 15.9 million

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Google Inc. - GOOG - close: 500.03 chg: - 2.58 stop: n/a

It looks like it's game over for our GOOG strangle. The stock has been stuck near the $500 strike price and will probably remain there until after option expiration. As traders this was a frustrating trade. The play was profitable more than once but it never quite reached our planned target (around $30.00). Readers may want to stick it out and see if GOOG can move sharply lower in the next couple of sessions. We're dropping it from the play list. The options we listed were the August $590 calls (GOO-HR) and the August $480 puts (GOP-TI). Our estimated cost was $19.10.

Picked on July 16 at $535.60 /exit 500.03
Change since picked: -35.57
Earnings Date 07/17/08 (confirmed)
Average Daily Volume = 4.5 million

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Internet Holders - HHH - cls: 52.30 change: -0.36 stop: n/a

The HHH began to breakout a few days ago but it was too little too late. This Internet sector HOLDR just didn't move enough for us in spite of the market's volatility. We're dropping it from the play list. August options expire in two days. The options we suggested were the August $55 calls (HHH-HK) and the August $45 puts (HHH-TI). Our estimated cost is $1.65.

Picked on July 03 at $ 50.50 /exit 52.30
Change since picked: + 1.80
Earnings Date 00/00/00
Average Daily Volume = 132 thousand

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Legg Mason - LM - close: 40.21 chg: -0.82 stop: n/a

LM has been a terrible performer for us. After weeks of trading the stock is right back to where we started. Short-term it looks like LM is setting up for another move lower but lately every time LM looks poised to crash bulls buy it the next day. We are dropping LM from the newsletter tonight. There are only two trading days left before August options expiration and LM is likely to hover around the $40 strike price. The options we listed were the August $45 calls (LM-HW) and the August $35 puts (LM-TG). Our estimated cost was $3.15.

Picked on July 23 at $ 40.20 /exit 40.21
Change since picked: + 0.01
Earnings Date 07/25/08 (confirmed)
Average Daily Volume = 3.1 million

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MarketVectors Agribusiness- MOO - close: 50.75 chg: +0.75 stop: n/a

It's been a bumpy ride for the MOO but the industry really didn't start moving until early August. Then the MOO didn't quite move enough. We came close to a profit on Monday's drop under $50.00 but the recent bounce is killing our chances and with only two days left before option expiration we're dropping this play. More aggressive traders may want to gamble on another drop toward $48.00, which would give you a chance to exit near breakeven. The options we suggested were the August $62 calls (MYV-HJ) and the August $50 puts (MOO-TX). Our estimated cost was $2.10.

Picked on July 03 at $ 57.25 /exit 50.75
Change since picked: - 6.50
Earnings Date 00/00/00
Average Daily Volume = 745 thousand

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Netflix - NFLX - close: 31.16 change: +0.35 stop: n/a

Traders may still have a chance to recoup some capital if NFLX can rebound dramatically from current levels. Bulls bought the dip near $30.25 midday and the stock does look poised to rally higher. Unfortunately, we only have two days left before options expire and NFLX needs to be above $32.50 if the calls are going to have any value left. We are going to close the play here instead of gambling on another big move but in NFLX's favor the stock has seen some sharp rallies in the past month. Traders need to remember that as we approach option expiration it's common for stocks to begin hovering around the nearest strike price. In this case that's going to be $30.00 or $32.50. The options we suggested were the August $32.50 calls (QNQ-HT) and the August $22.50 puts (QNQ-TX). Our estimated cost is $1.20.

Picked on July 23 at $ 27.98 /exit 31.16
Change since picked: + 3.18
Earnings Date 07/25/08 (confirmed)
Average Daily Volume = 1.3 million

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PowerShares QQQ - QQQQ - cls: 47.70 chg: -0.10 stop: n/a

The Qs held up reasonably well on Wednesday and the August $47 calls hit an intraday high of $1.20. If the NASDAQ or more specifically the NASDAQ-100 index can bounce from here then the August $47 calls have a good chance of hitting $1.50 or higher before expiration on Friday. We're going to play it more conservatively and suggest readers exit right now. The calls are trading around $0.90 and that's about half of our initial cost. We'd rather exit now than see that 90 cents vanish. The options we suggested were the August $47 calls (QQQ-HU) and the August $43 puts (QQQ-TQ). Our estimated cost is $1.80.

Picked on July 07 at $ 44.90 /exit 47.70
Change since picked: + 2.80
Earnings Date 00/00/00
Average Daily Volume = 148 million

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UBS Ag - UBS - close: 19.44 change: -0.86 stop: n/a

In spite of all the news and all the volatility surrounding UBS and the financials the stock has gone nowhere in the last month! The stock looks poised for another leg lower but with only two days left before August options expire we're dropping it. The options we suggested were: UBS Strangle #1) This uses the August $22.50 calls (UBS-HX) and $17.50 puts (UBS-TW). Our estimated cost was $1.90. UBS Strangle #2) This uses the August $25.00 calls (UBS-HE) and $15.00 puts (UBS-TC). Our estimated cost was $0.90.

Picked on July 13 at $19.49 /exit 19.44
Change since picked: - 0.05
Earnings Date 08/12/08 (unconfirmed)
Average Daily Volume: 7.3 million

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Valero Energy - VLO - close: 33.78 chg: -1.08 stop: n/a

A decline in gasoline inventories gave refiners a lift on Wednesday but it wasn't enough to change the trend in VLO or break the stock out of its trading range. We only have two days left before August options expire and we're dropping VLO early.
The options we suggested were the August $37.50 calls (VLO-HU) and the August $27.50 puts (VLO-TS). Our estimated cost is $1.38.

Picked on July 27 at $ 31.88 /exit 33.78
Change since picked: + 1.90
Earnings Date 07/29/08 (confirmed)
Average Daily Volume = 12.7 million
 

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