Editor's Note:

Traders should be cautious when it comes to launching new positions. The market's two-week bounce could just be an exaggerated oversold bounce that soon rolls over again. Economic data was generally positive last week but it's still marked by the occasional disappointment. U.S. markets could be heavily influenced by what happens in China and Europe. The Chinese Shanghai will open after a weeklong holiday and many expect it will fall in reaction to the new rules for bank reserve requirements. Meanwhile Greece is going to try and auction off five billion euros worth of ten-year bonds in the near future (date unknown). If that bond auction fails the EU-implosion worry is back on the table. There seem to be a lot of potential land mines that can derail this rebound in stocks but then bulls usually need a wall of worry to climb.

A few additional stocks I would keep my eye on as potential candidates are: CTXS, PFCB, SIG, and maybe VZ.



NEW BULLISH Plays

Patterson Companies - PDCO - close: 29.79 change: +0.25 stop: 27.99

Why We Like It:
PDCO is a wholesale supplier for dental, vet and pet supplies. The company recently reported earnings that were inline with expectations. There was a definite lack of fireworks on the report. However, the trend is still bullish with traders buying the dip at the rising 50-dma. Aggressive traders could jump in now. I am suggesting a trigger to buy PDCO at $29.25 with a stop at $27.99. Cautious traders could try a stop closer to the 50-dma. If we are triggered at $29.25 our first target is $32.50. Our time frame is four to six weeks.

Annotated chart:

Entry on  February xx at $xx.xx <-- TRIGGER @ 29.25
Change since picked:     + 0.00   			
Earnings Date          05/20/10 (unconfirmed)    
Average Daily Volume:       1.4 million 
Listed on  February 20, 2009    


Raytheon Co - RTN - close: 55.54 change: +0.18 stop: 52.75

Why We Like It:
The bounce in the defense sector has been pretty strong the last few days. Helping power that move is a rally to new 52-week highs in RTN. The breakout over resistance at $55.00 is bullish. I am really tempted to go ahead and buy the stock right here. However, the market and RTN do look a little bit overbought. Lets exercise some patience and use a trigger to buy the stock at $54.25. I'm suggesting a stop under the 50-dma at $52.90. If triggered at $54.25 our first target is $59.00. Our time frame is four to six weeks.

Annotated chart:

Entry on  February xx at $xx.xx <-- TRIGGER @ 54.25
Change since picked:     + 0.00   			
Earnings Date          04/22/10 (unconfirmed)    
Average Daily Volume:       2.9 million 
Listed on  February 20, 2009    


NEW BEARISH Plays

PACCAR Inc. - PCAR - close: 35.95 change: +0.02 stop: 36.65

Why We Like It:
PCAR designs and produces all manner of trucks and vehicle parts. The oversold rebound in the stock appears to be failing at the 50-dma. This would support the bearish trend of lower highs and lower lows. I strongly suspect that PCAR is going to roll over again. I'm suggesting readers use a trigger to open bearish positions at $34.90 (more aggressive traders may want to jump in now with a stop at 36.75). If we are triggered at $34.90 our first target is $32.00. Our second target is $30.50. Our time frame is several weeks. FYI: It is worth noting that the most recent data listed short interest at 7.5% of the 321-million share float.

Annotated chart:

Entry on  February xx at $xx.xx <-- TRIGGER @ 34.90
Change since picked:     + 0.00   			
Earnings Date          04/28/10 (unconfirmed)    
Average Daily Volume:       3.1 million 
Listed on  February 20, 2009