NEW BULLISH Plays

Fortune Brands Inc. - FO - close: 48.89 change: -0.81 stop: 44.70

Company Description:
Fortune Brands is a leading consumer brands company. We're driven by powerful brands in three attractive consumer categories: Distilled Spirits, Home & Security, and Golf. Reflecting the strength of our brands, 90% of our sales come from #1 or #2 market positions. Reflecting the success of our commitment to innovation, about 20% of sales come from products introduced in just the past three years. Behind our strong brands and successful strategy are more than 25,000 people with the passion to win (source: company press release or website)

Why We Like It:
FO has led a very impressive rally off its February lows with a run from $40 to $50 in just a few weeks. Now shares are stalling at round-number, psychological resistance near $50.00. I still believe the trend is up but shares are due for a correction first. I am suggesting we buy FO on a dip at $46.00. If triggered our first target is $49.95. Our second target is $53.50 given enough time, which could take a few weeks. FYI: The Point & Figure chart is very bullish with a $60 target.

Use a trigger to buy the dip at $46.00

Suggested Position: FO stock @ 46.00 (unopened)

Annotated chart:

Entry on March xx at $xx.xx
Earnings Date 04/30/10 (unconfirmed)
Average Daily Volume: 805 thousand
Listed on March 20th, 2010


NEW BEARISH Plays

Federal Signal Corp. - FSS - close: 8.92 change: -0.22 stop: 9.31

Company Description:
Federal Signal Corporation (NYSE: FSS) enhances the safety, security and well-being of communities and workplaces around the world. Founded in 1901, Federal Signal is a leading global designer and manufacturer of products and total solutions that serve municipal, governmental, industrial and institutional customers. (source: company press release or website)

Why We Like It:
With state and local governments running out of money you'd think FSS would be struggling. Maybe the company is a beneficiary of the federal government's various stimulus plans. Or maybe shares of FSS are screaming higher on short covering. The stock has produced an impressive rally but now it's stalling at long-term resistance near $9.30. The action on Thursday and Friday last week looks like a bearish reversal. I am suggesting we launch bearish positions now but keep them small. This is an aggressive trade and the most recent data listed short interest at 5.5% of the 46.3 million share float. That does raise the risk of a short squeeze. We'll use a stop loss just above resistance. Our target to cover and exit is $8.00. (Readers may want to keep FSS on their watch list. If shares do correct and eventually rebound to breakout over the $9.30 level it would look like a very bullish candidate)

Suggested Position: (SHORT) FSS stock at $8.92

Annotated chart:

Entry on March 22 at $ 8.92(?) small positions
Earnings Date 04/30/10 (unconfirmed)
Average Daily Volume: 257 thousand
Listed on March 20th, 2010