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Call Updates

Adobe Systems - ADBE - close: 44.10 chg: -1.01 stop: 41.50

The broad-based market weakness hit the tech-heavy NASDAQ for a 1.4% loss. Shares of ADBE under performed the market after being downgraded this morning before the bell. Shares ended the day off 2.2%. Today's decline has exceeded a 38.2% retracement of ADBE's August climb and shares closed under the rising 10-dma, which might be considered short-term bearish. We are not suggesting new bullish positions at this time. More conservative traders may want to raise their stop loss. Our target is the $47.50-50.00 zone. The Point & Figure chart is bullish with a $71 target.

Picked on August 05 at $ 43.34
Change since picked: + 0.76
Earnings Date 09/16/08 (unconfirmed)
Average Daily Volume = 6.5 million

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Illumina - ILMN - cls: 92.68 chg: -1.41 stop: 88.45 *new*

We're not giving up on ILMN. The stock hit $95.00 on Friday and our first target is $95.25. The stock displayed some volatility this morning and eventually pulled back toward the $92 region before bouncing this afternoon. The rebound this afternoon could be a new bullish entry point. Readers should note that we're raising our stop loss to $88.45. Our second target is the $99.50 mark, just below the top of its trendline of its rising channel and below round-number, psychological resistance at $100.00. 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 14 at $ 91.55
Change since picked: + 1.13
Earnings Date 07/27/08 (unconfirmed)
Average Daily Volume = 1.2 million

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Itron Inc. - ITRI - close: 102.23 change: -2.80 stop: 98.45

ITRI spiked to a new three-month high at $105.99 this morning although if you look at an intraday chart the move toward $106 looks like a bad tick. I don't see it really trading over $105.25 this morning. Today's session was negative with a 2.5% loss and what appears to be a potential bearish engulfing candlestick pattern. I would look for a dip back toward the $101.00-100.00 zone before considering new bullish positions. We've set two targets. Our first target is $105.75. Our second target is $109.90.

Picked on August 14 at $ 101.50
Change since picked: + 0.73
Earnings Date 10/30/08 (unconfirmed)
Average Daily Volume = 616 thousand

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Research In Motion - RIMM - cls: 127.01 chg: -1.79 stop: 124.45*new*

RIMM pulled back to the $125 level again and found additional support near the 50-dma. The technical momentum indicators are starting to struggle, which should put traders on the defensive. We are adjusting our stop loss to $124.45 and we're adjusting our secondary target to $134.75. RIMM has already exceeded our first target at $129.00. We're not suggesting new positions at this time.

Picked on July 31 at $120.50 /1st target exceeded
Change since picked: + 6.51
Earnings Date 09/25/08 (unconfirmed)
Average Daily Volume = 18.6 million

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CBOE Volatility Index - VIX - close: 20.98 chg: +1.40 stop: n/a

The widespread market weakness produced a little surge in the investor fear gauge and the VIX rallied 7%. This indicator still has a bearish trend of lower highs, which is actually bullish for the market. I still expect another market sell-off that could push the VIX toward 30 and beyond. This is an aggressive bet that the market will drop and the VIX will climb sharply before October option expiration. Readers might want to wait for a new climb over 22.00 or 22.50 before initiating new positions. Our target is $29.75 but readers might want to consider scaling out of positions in the $28-29 region.

Picked on August 03 at $ 22.57
Change since picked: - 1.59
Earnings Date 00/00/00
Average Daily Volume = x million
 

Put Updates

Bank of Amer. - BAC - cls: 29.30 change: -1.40 stop: 34.15

Financial stocks led the market lower on Monday. A Barron's article over the weekend re-emphasized what many on Wall Street are worried about - that if the U.S. government does have to step in to save FNM and FRE that it would wipe out current shareholders. Shares of BAC reacted with a 4.5% decline and the two-day pattern looks like a failed rally and the resumption of a new down trend in BAC. This looks like a new entry point for puts if you're aiming for the $25 region. More conservative traders may want to consider a tighter stop in the $32.50-31.50 zone. 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: - 2.22
Earnings Date 10/16/08 (unconfirmed)
Average Daily Volume = 90.4 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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Lehman Brothers - LEH - close: 15.03 chg: -1.14 stop: n/a

Weakness in the financials also hit the broker-dealer stocks. The XBD index lost about 3%. Shares of LEH under performed their peers with a 7% decline. The MACD on the daily chart is very close to a new sell signal. The stock definitely looks poised to move lower. We have five 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: - 2.02
Earnings Date 09/18/08 (unconfirmed)
Average Daily Volume = 63 million
 

Dropped Calls

None
 

Dropped Puts

Freddie Mac - FRE - close: 4.39 change: -1.46 stop: 8.15

Target exceeded. We can attribute a good portion of today's 25% drop in shares of FRE to a Barron's article over the weekend. The stock was already weak and vulnerable and Barron's merely reiterated what has already been said, that if the government has to step in to save FRE current shareholders will probably be wiped out. Our target on FRE was the $5.00 mark. Shares opened at $5.40 and plunged to $4.36 intraday. The July 11th, 2008 low was $3.89, which is where we would expect an oversold bounce.

Picked on July 20 at $ 9.18 *target exceeded
Change since picked: - 4.79
Earnings Date 08/06/08 (confirmed)
Average Daily Volume = 45.5 million
 

Dropped Strangles

None
 

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