Market Summary

The market finished with a loss today after bleak readings on the economy heightened investors' fears of recession. Wall Street was disappointed when the Philadelphia Federal Reserve reported that regional manufacturing fell more than predicted. Another piece of bad news was the Conference Board's January index of leading economic indicators, which posted its fourth straight drop. The Dow fell 142.96, or 1.15 percent, to 12,284.30. The S&P 500 shed 17.50, or 1.29 percent, to 1,342.53, while the Nasdaq fell 27.32, or 1.17 percent, to 2,299.78.

Growth Stocks

WGOV @ $30.92 (Woodward Governor) manufactures energy control systems and components for aircraft and industrial engines and turbines. Revenues have increased between 20% and 25% during each of the last four quarters. Earnings have increased between 36% and 52% during the same time period and are expected to grow 26% this year to $1.59 a share. We are establishing a position here and setting our stop loss at $29.

Options

OXY @ $73.09 (Occidental Petroleum) is engaged in the exploration and production of crude oil and natural gas primarily in the United States. We like this stock long term, but feel this is a more interesting way to play it. We will buy:

VXY AJ @ $25.50 (Occidental Petroleum January 2009 $50 Call) that has $2.41 in time value and will sell (or write):

OXY DP @ $1.80 (Occidental Petroleum April 2008 $80 Call). We will collect our premium and then write another call option in 58 days when this expires. We are covered with our LEAP on OXY and if we managed to write a call for an average of $1.80 every two months for the next year, we will gain almost 100% on our investment. If the stock ever gaps up higher and we get called, we will gain at least 30% and possibly much more. If the stock sells off, we gain premium from calls written and will continue to write calls against our longer term option to generate income.

Anyone that doesn't understand this investment can call me at (386)756-9728 and I'll walk you through it. This is a much safer way to own the stock and profit in this market in our humble opinion.

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