Editor's Note:

I remain very cautious on the stock market. The jobs report on Friday, while positive, came in less than expected. Stocks could see a knee-jerk reaction lower on Monday but will there be any follow through. While I want the market to correct so we can get a better entry point for bullish positions there is no rule that says the market has to correct. It will eventually in its own time. Be careful launching new positions. I'm adding a couple of new bullish candidates but I would limit your exposure.

The better trade is probably just stepping back and waiting to see where the market settles on Monday before making any decisions.


NEW BULLISH Plays

AU Optronics - AUO - close: 11.65 change: +0.32 stop: 10.90

Company Description:
AUO was formed in September 2001 by the merger of Acer Display Technology, Inc.,(the former of AUO, established in 1996) and Unipac Optoelectronics Corporation. In October 2006, AUO merged with Quanta Display Inc. to create a larger TFT-LCD manufacturer with more than 17% of the world's large-sized TFT-LCD market. Additionally, the amassed production of company's G6 reached worldwide top 1. (source: company press release or website)

Why We Like It:
AUO makes LCD monitors. If this rally continues, technology stocks should continue to perform well. AUO caught my eye because the stock has a bullish posture without looking overbought and overextended. The stock has been consolidating the last several days and just broke out on Thursday with above average volume. I am suggesting small bullish positions now. More conservative traders may want to wait for AUO to clear possible resistance at the $12.00 level first. Our target is the January highs in the $13.20-13.30 zone. FYI: The Point & Figure chart is very bullish and forecasts a $21 long-term target.

Small Positions Only

Suggested Position: AUO stock @ 11.65(?)

Annotated chart:

Entry on April 05 at $11.65(?)
Earnings Date 04/22/10 (unconfirmed)
Average Daily Volume: 2.5 million
Listed on April 3rd, 2010


BorgWarner Inc. - BWA - close: 39.22 change: +1.04 stop: 36.90

Company Description:
Auburn Hills, Michigan-based BorgWarner Inc. (NYSE: BWA) is a product leader in highly engineered components and systems for vehicle powertrain applications worldwide. The FORTUNE 500 company operates manufacturing and technical facilities in 59 locations in 18 countries. Customers include VW/Audi, Ford, Toyota, Renault/Nissan, General Motors, Hyundai/Kia, Daimler, Chrysler, Fiat, BMW, Honda, John Deere, PSA, and MAN. (source: company press release or website)

Why We Like It:
As the pace of manufacturing rises the trend is up for auto parts maker BWA. Investors have been buying the dips for weeks. Shares displayed relative strength the last couple of sessions. I am suggesting we hop on board if BWA can breakout past potential round-number resistance at the $40.00 level. We'll use a trigger to open bullish positions at $40.25. If triggered our target is $44.75. BWA doesn't move super fast so this could take a few weeks for the stock to get there. Our initial entry point and stop loss set up is somewhat aggressive. More conservative traders may want to use a tighter stop. My biggest concern is that BWA might see an intraday spike over $40.00 and then reverse on us. Overall the stock looks bullish after months of consolidating sideways. The Point & Figure chart looks very bullish and is forecasting a long-term $55 target.

Trigger to open bullish positions $40.25

Suggested Position: BWA stock @ 40.25 (unopened)

Annotated chart:

Entry on April xx at $xx.xx
Earnings Date 04/29/10 (unconfirmed)
Average Daily Volume: 1.8 million
Listed on April 3rd, 2010