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Call Updates

Allergan - AGN - close: 57.36 change: -0.60 stop: 54.95

The market drops again as investors question the probability of the government passing anything significant to "save" the market in the next few days. Biotechs were not exempt and AGN produced another failed "rally" between $59.50 and $60.00. I am reiterating my comments from Monday that AGN looks poised to retest the $57.00-56.00 zone. Wait for signs of a bounce from the $56 region before considering new bullish positions. If you look at the VIX and how it is creeping higher it suggests the market could see another swoosh lower. Traders will want to avoid bullish positions until after that occurs. Don't forget we're still in a bear market. AGN is a bullish candidate thanks to some relative strength. More conservative traders may want to use a stop closer to $56.00 instead. Our target is the $64.00-65.00 range. The Point & Figure chart is bullish with a $75 target.

Picked on September 21 at $ 58.68
Change since picked: - 1.32
Earnings Date 11/06/08 (unconfirmed)
Average Daily Volume = 2.4 million


Tidewater Inc. - TDW - cls: 60.68 chg: -1.99 stop: 57.90

Some profit taking in crude oil and the widespread market weakness was enough to pull TDW to an intraday low of $59.83. Our suggested entry point to buy calls on TDW was the $60.25-60.00 zone. Our play is now open. The dip in TDW may not be over yet. I would not be surprised to see TDW dip toward its 10-dma around $58.90 or the 200-dma closer to $58.00. My comments in the AGN update about the VIX and the bear market also apply here with TDW. Now that our call play is open we have two targets. Our first target is $64.90. Our second target is $68.00.

Picked on September 23 at $ 60.25 *triggered 9/23
Change since picked: + 0.43
Earnings Date 10/30/08 (unconfirmed)
Average Daily Volume = 1.4 million


Washington Mutual - WM - close: 3.20 change: -0.13 stop: n/a

Financial stocks led the market lower on Tuesday as investors doubted the government's success to actually crank out a plan to save the financial system. WM is also sliding as rumors slip out that the company is getting pressure by the Office of Thrift Supervision to sell itself soon before the government decides to step in and facilitate a break up of the company's assets. Currently there are about six different banks considering an acquisition of WM but there was talk yesterday that WM may want to wait it out and see what the Treasury's actual plan will be before allowing itself to be sold. At any rate it looks like WM's fate could be sealed by the end of the month. The government could step in or it could be sold. This is a very speculative, high-risk bet that WM will be bought and bought for a premium. The recent decline is just a "better" entry point to buy calls.

We're not listing a stop loss because the stock is so volatile. We listed the October or January calls as suggested strikes to buy.

Picked on September 21 at $ 4.25
Change since picked: - 1.05
Earnings Date 10/22/08 (unconfirmed)
Average Daily Volume = 113 million


SPDR S&P Oil - XOP - cls: 49.72 chg: -1.11 stop: 47.45 *new*

It should be no surprise that the XOP continued lower today. The next stop should be the 10-dma near $48.50 or the $48.00 level. Wait and watch for a bounce near $48.00 before considering new bullish positions. Readers may want to consider a stop loss closer to $48.00. We are moving our stop to $47.45. Nimble traders should also consider taking some money off the table if the XOP nears technical resistance at its 50-dma again. The XOP hit our first target on Sept. 19th. We're currently aiming for the $53.50 mark.

Picked on September 16 at $ 46.70 /1st target hit 9/19/08
Change since picked: + 3.02
Earnings Date 00/00/00
Average Daily Volume = 2.0 million

Put Updates

Volatility Index - VIX - cls: 35.72 chg: +1.87 stop: n/a

The VIX is still bouncing higher and represents a high-level of fear in the market by investors. The lack of confidence in the government's latest plan seems to be setting us up for another big plunge lower in stocks and another spike higher in the VIX. At this time I would wait for another blow-off top type of move like we saw on September 18th in the VIX before opening up new bearish put positions. We're setting our first target at 25.50. Our second target is 21.00.

Picked on September 16 at = 30.30
Change since picked: + 5.42
Earnings Date 00/00/00
Average Daily Volume = --- million

Strangle Updates


Dropped Calls

Toll Brothers - TOL - close: 23.52 change: -1.10 stop: 23.95

A negative earnings report from rival homebuilder Lennar (LEN) and the broad-based market weakness helped push TOL to another decline. The stock broke down under its 10-dma and broke down under the $24.00 level hitting our stop loss at $23.95. The next stop for TOL could be the 50-dma near $22.0 or the 200-dma near $21.00.

Picked on September 22 at $ 26.00 *triggered 9/22, stopped 9/23
Change since picked: - 2.48
Earnings Date 12/04/08 (unconfirmed)
Average Daily Volume = 5.1 million

Dropped Puts


Dropped Strangles


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