Editor's Note:
Good evening. I didn't get the answers I was looking for on Friday as trading was extremely volatile and there was a big disconnect between stocks and bonds (see my comments in the TBT play update). The economic data had a lot of noise which I think confused traders, me included. However, we should find out on Monday as the tone will be set early in the week so staying nimble is a must. For now I am reluctantly bullish because the bulls are still in control and until that changes we have to respect it. I do believe it could change very quick and this market has a knack for reversing trends on a dime. I have presented two new long plays with very tight stops and targets that are achievable. I like the set-ups of these trades but I am not married to them and suggest readers honor the stops and get out of the way if things turn south. Trade smart and keep your position size small. Please email me with any questions.


NEW BULLISH Plays

Teck Resources Ltd - TCK - close 35.25 change +0.50 stop 32.65

Company Description:
Teck Resources Limited (Teck), formerly Teck Cominco Limited, is engaged in mining and related activities, including exploration, development, processing, smelting and refining. Its major products are metallurgical coal, copper and zinc. The Company also produces precious metals, lead, molybdenum, electrical power, fertilizers and various specialty metals. Metal products are sold as refined metals or concentrates. It also owns an interest in certain oil sands leases, and has a partnership interest in an oil sands development project. The Company operates in five segments: copper, coal, zinc, energy and corporate. Its subsidiaries include Teck Metals Ltd. (Teck Metals), Teck American Inc. (TAI), Teck Alaska Inc. (TAK), Teck Highland Valley Copper Partnership (Highland Valley Copper), Teck Coal Partnership (Teck Coal), Compania Minera Teck Quebrada Blanca S.A. (Quebrada Blanca) and Compania Minera Teck Carmen de Andacollo (Andacollo).

Target(s): 36.00, 36.90, 37.70
Key Support/Resistance Areas: 37.00, 36.00, 34.75, 34.00, 33.00, 32.25
Time Frame: 1 to 2 weeks

Why We Like It:
TCK has broken out of its primary downtrend that began on 4/7 and surged higher this past week up to its 200-day SMA before turning down. Material stocks are gaining momentum and I think the recent pullback has allowed them to regain energy for a continued move higher. The stock is maintaining an upward trend line that began on 7/1 and is also above its 20-day and 50-day SMA's. I suggest we us a trigger $34.85 to initiate long positions. Our stop will be $31.80 which is below the 20-day and 50-day SMA's and the recent upward trend line. The stop will be adjusted once we are in the position.

Suggested Position: Long TCK stock if it trades to $34.85

Options Traders: September $36.00 CALL, current ask $2.02, estimated ask at entry $1.82

Annotated chart:

Entry on July xx
Earnings More than 2 months (unconfirmed)
Average Daily Volume: 6.4 million
Listed on July 31, 2010


Oil Service HOLDRS - OIH - close 105.14 change -0.17 stop 102.35

Company Description:
Oil Service HOLDRS Trust issues depositary receipts called Oil Service HOLDRS, representing an undivided beneficial ownership in the common stock of a group of specified companies that, among other things, provide drilling, well-site management, and related products and services for the oil service industry. The Bank of New York is the trustee. The Trust will terminate on December 31, 2041, or earlier if a termination event occurs.

Target(s): 108.50, 110.30
Key Support/Resistance Areas: 110.50, 108.60, 107.00, 104.75, 102.80
Time Frame: 1 to 2 weeks

Why We Like It:
I'm sticking with an ETF here to eliminate some of the earnings noise and mitigate risk in individual names. Oil service stocks have been beaten down and are now showing signs of life. OIH is forming an ascending triangle on its daily chart and has made a series of higher lows since it bottomed on 6/1. The ETF is above its 20-day and 50-day SMA's which is providing further support. I'm comfortable with positions at current levels with tight a stop of $102.30 which is below the low from 7/23. We will either be right or right out of this trade. We are playing for a breakout above $107.00 into the $108.50 to $110.00 area which is near our two targets. $108.50 was a prior support level in the fall of 2009 so OIH could see some resistance there. As OIH approaches our targets I suggest readers be quick to take profits or tighten stops.

Suggested Position: Long OIH stock at current levels

Buy September $110.00 CALL, current ask $2.86

Annotated chart:

Entry on August xx
Earnings N/A (unconfirmed)
Average Daily Volume: 8 million
Listed on July 31, 2010