NEW BULLISH Plays

North American Palladium - PAL - close: 4.47 change: -0.13 stop: 3.85

Why We Like It:
Palladium and platinum are part of a group of metals called Platinum Group Metals or PGMs. Collectively they are six times more scarce than gold. There are fewer miners and production peaked several years ago. However, the demand for PGMs continues to rise with palladium and platinum demand exploding because of use in electronics and catalytic converters. The net annual surplus of these metals is around 60,000 ounces.

In the U.S. a new ETF begin trading on Jan-8th on platinum (PPLT) and on palladium (PALL). Following the success of the silver and gold ETFs analysts believe the new PPLT/PALL ETFs could end up holding 500,000 ounces each by year-end or shortly thereafter. In only the first week of trading both have acquired nearly 100,000 ounces each. (PPLT 89,948 oz, PALL 99,077 oz) If demand continues to increase for the ETFs the demand for the actual metal may exceed existing surplus supply and create a short squeeze.

The impact to the stock price for the miners has already been huge based on the pre-release hype but now there is actual demand rather than expected demand. North American Palladium is in the sweet spot and the stock is relatively cheap, much cheaper than the ETFs. If demand for the PGMs continues the price of the actual metal will climb as well as the miners.

Our first target is $7.00.

Annotated chart:

Entry on   January 19 at $4.47 
Change since picked:     + 0.00   			
Earnings Date          Mid February (no date available)   
Average Daily Volume:      1.4 million 
Listed on   January 17, 2009    


CVR Energy - CVI - close: 8.03 change: +0.23 stop: 7.50

Why We Like It:
CVR Energy is battling back from a severe case of depression after being knocked back from $13.85 in October to $6.50 in December. The company owns a 115,000 bpd refinery in Coffeyville Kansas, operates a crude oil gathering system in five states, an asphalt business and an ammonium nitrate fertilizer business in Coffeyville. This is a small cap stock that was crushed after an unexpected outage at the refinery in October.

While they were down for the extended outage they also added some significant improvements. There was also a $3.9 million charge in Q3 for a termination of a swap agreement.

All those problems are in the past and hopefully CVR is poised to breakout over resistance at $8 next week. CVR was up the last three days while oil prices were crashing.

Our first target is $12.50.

Annotated chart:

Entry on:  Not yet entered - entry trigger $8.20 
Change since picked:     + 0.00   			
Earnings Date          February (no date available)   
Average Daily Volume:      411,000 
Listed on   January 17, 2009