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Call Updates

CBOE Volatility Index - VIX - close: 21.99 chg: +1.34 stop: n/a

The VIX rose sharply today as traders grew more fearful since the market was unable to maintain its gains. The volatility index broke out from its bearish pattern of lower highs. Our readers might want to consider new call positions here. We're going to maintain our previous suggestion to wait for a move over 22.50. Don't forget that this is a very speculative play (as in no stop loss) as we bet on a strong enough market sell-off to send the VIX toward 30.00. In our favor is the time of year with September and the first several days of October historically the worst time of year for stocks. Plus, we have the ongoing credit crisis, financial sector woes, and escalating tensions with Russia (not to mention Iran), oh and let's throw in a couple of hurricanes. 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: - 0.58
Earnings Date 00/00/00
Average Daily Volume = x million

Put Updates

Air Products - APD - cls: 91.09 change: -0.76 stop: 94.15

Right on cue shares of APD continued to roll over. I don't see any changes from our previous comments. We would still consider new bearish positions here. More conservative traders might want to wait for a breakdown under $90.00 before initiating positions. We are listing two targets. Our first target is $87.00. Our second target is $84.00. The Point & Figure chart is bearish with a $73 target.

Picked on August 31 at $ 91.85
Change since picked: - 0.76
Earnings Date 10/22/08 (unconfirmed)
Average Daily Volume = 1.8 million


L-3 Comm. - LLL - close: 103.94 chg: -1.65 stop: 105.05 *new*

The market's strength this morning and news that LLL had won a $60 million contract from the U.S. Navy helped send the stock to an intraday high of $106.98. Our stop loss was $106.65. Our brand new play has already been stopped out. However, the rally failed, which does not inspire a lot of confidence in LLL's stock. We'll mark this as a loss today but we re-listing LLL as a put play. However, this time we're suggesting a trigger to buy puts at $102.00 since LLL appears to have support near $102.50. Our target is $97.50 or the 50-dma, whichever LLL hits first.

Picked on September x at $ xx.xx <-- trigger 102.00
Change since picked: + 0.00
Earnings Date 10/23/08 (unconfirmed)
Average Daily Volume = 1.0 million


Lindsay Corp. - LNN - cls: 77.74 chg: -4.17 stop: 83.35

LNN is off to a good start. Shares broke down under support near $80.00 and hit our trigger to buy puts at $79.85. If you don't want to chase it here then look for a bounce back toward $80.00, which should be new overhead resistance. We have two targets. Our first target is $75.25. Our second target is $71.00.

Picked on September 2 at $ 79.85 *triggered
Change since picked: - 2.11
Earnings Date 10/08/08 (unconfirmed)
Average Daily Volume = 480 thousand


Millicom Intl. - MICC - cls: 78.58 chg: -0.79 stop: 81.55*new*

Sometimes the greatest challenge as a trader is to not let emotions influence your trading. Today the performance in MICC was frustrating. Over the weekend we adjusted our stop loss down to $81.55. This morning, when the market was in rally mode, shares of MICC hit an intraday high of $81.56. We've been stopped out for a loss. The stock continues to look bearish. We are suggesting that readers re-open new put positions if you were stopped out. We'll adjust our stop loss to $81.65. We have two targets. Our first target is $75.05. Our second target is $72.50. FYI: A move under $78.00 will produce a brand new Point & Figure chart sell signal.

Picked on August 28 at $ 78.58 *stopped out/re-listed
Change since picked: + 0.88
Earnings Date 10/23/08 (unconfirmed)
Average Daily Volume = 1.0 million


Monsanto - MON - close: 109.34 chg: -4.91 stop: 118.55

Another strong gain for the U.S. dollar and a plunge in crude oil sent shares of MON lower today. If you don't want to chase an entry point here readers could wait for a bounce back into the $112-114 zone and enter new put positions there. Our target is the $101.00. The $100.00 level should be round-number support.

Picked on August 31 at $114.25
Change since picked: - 4.91
Earnings Date 10/08/08 (unconfirmed)
Average Daily Volume = 6.7 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.)


Lehman Brothers - LEH - close: 16.13 chg: +0.04 stop: n/a

It sounds like Wall Street is trying to talk up a rescue for LEH but the rally in the stock today struggled. We do not see any changes from our weekend comments. We're not suggesting new strangle positions in LEH at this time. We only have three weeks left and LEH still has to make some big moves. We need to see LEH significantly above $24.00 or under $10.00. 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: - 0.92
Earnings Date 09/18/08 (unconfirmed)
Average Daily Volume = 63 million

Dropped Calls

Arch Coal - ACI - close: 46.19 chg: -8.05 stop: 52.37

Shares of ACI suffered a crushing blow on Tuesday. The reaction was based on plummeting oil prices. Hurricane Gustav weakened as it neared the coast and appeared to inflict a lot less damage than previously expected. This hurricane news and a pop in the U.S. dollar sent crude oil plunging. Oil was down almost 9% overnight but recovered to a 4.5% loss around $110 a barrel. Oil and coal stocks have been trading in sync lately. ACI was hammered with a 14.8% loss after gapping down this morning at $51.50. Our suggested stop loss was $52.37 (breakeven) so we would have been stopped out at the open.

Picked on August 20 at $ 52.37 /stopped 51.50 gap down exit
Change since picked: - 6.18
Earnings Date 10/20/08 (unconfirmed)
Average Daily Volume = 6.4 million


Chesapeake Energy - CHK - cls: 45.24 chg: -3.16 stop: 46.90

The plunging price oil also yanked the carpet out from under natural gas prices and this in turn impacted CHK. Shares of CHK gapped open lower at $46.15. This was under our suggested stop loss at $46.90 so we would have exited at the open.

Picked on August 20 at $ 48.05 */stopped 46.15 gap down exit
Change since picked: - 2.81
Earnings Date 11/06/08 (unconfirmed)
Average Daily Volume = 20.2 million


Itron Inc. - ITRI - close: 100.78 change: -2.80 stop: 101.25

ITRI displayed relative weakness today. Most of the market rallied higher this morning. ITRI did not participate in the morning pop. Instead ITRI was weak from the start and slid toward round-number support at $100.00. Shares hit our newly revised stop loss at $101.25 closing the play. Note: ITRI had previously hit our first target of $105.75 on August 28th.

Picked on August 14 at $ 101.50 /stopped out 101.25
Change since picked: + 2.08
Earnings Date 10/30/08 (unconfirmed)
Average Daily Volume = 616 thousand


United States Oil - USO - cls: 89.19 chg: -3.68 stop: 89.79

If you haven't heard by now hurricane Gustav did not pack much of a punch and most believe that the storm did a lot less damage than expected. This sent the price of crude oil crashing lower. The USO gapped open lower to reflect overnight trading in oil and the USO opened at $86.88, below our stop loss and below several levels of potential support at $90.00 and its 200-dma. Oil did rebound from its lows but we would have been stopped out at the opening bell. This play on the USO was triggered one hour after the August 27th oil inventory report, which is how we arrived at the $95.12 entry point.

Picked on August 27 at $ 95.12 /stopped out 86.88 gap down exit
Change since picked: - 5.93
Earnings Date 00/00/00
Average Daily Volume = 13.9 million


Whiting Petrol. - WLL - cls: 90.65 chg: -5.59 stop: 91.95

WLL is another casualty of the sell-off in oil today. The stock gapped open lower at $93.97 and plunged to $89.41 before paring its losses. Our stop loss was at $91.95. The play is now closed. WLL did manage to close above $90.00. It might be worth keeping WLL on your watch list to see if shares rebound or breakdown. A drop under $89.00 might be an entry point for a move toward stronger support at $80.00.

Picked on August 26 at $ 95.80 /stopped out 91.95
Change since picked: - 5.15
Earnings Date 10/30/08 (unconfirmed)
Average Daily Volume = 1.1 million

Dropped Puts

Chipotle Mex.Grill - CMG - cls: 73.60 chg: +4.28 stop: 73.65

CMG popped higher with the broader market and then stayed higher. The ongoing strength today was probably short covering since the initial pop broke through CMG's short-term trend of lower highs but not the longer-term trend of lower highs. Our stop loss was $73.65, which was hit this morning. Readers may wan to keep an eye on it. A failed rally at the 50-dma or a new decline under $70.00 could be another bearish position.

Picked on August 20 at $ 69.90 */stopped out 73.65
Change since picked: - 0.58
Earnings Date 10/30/08 (unconfirmed)
Average Daily Volume = 888 thousand

Dropped Strangles


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