Editor's Note:
I'm filling in for Scott tonight. My market outlook for the fourth quarter is bullish but I suspect the market will roll over in the next several days. Look for traders to buy the dip in the second half of October.

In addition to tonight's new candidates both TSCO and SNDK caught my eye. TSCO has rallied to round-number resistance near $40. Readers may want to put it on their watch list as a bullish candidate for a pull back toward support near $36.00. SNDK looks bearish. The H&S pattern is forecasting a drop toward $30.00. Traders could look for another failed rally near $40 with a tight stop or look for a new decline under $35 as a potential entry point.

-James


NEW BULLISH Plays

Logitech Intl. - LOGI - close: 17.36 change: -0.07 stop: 15.75

Target(s): $18.50, 19.50
Key Support/Resistance Areas: about every 50-cents (17.50, 17.00, 16.50)
Current Gain/Loss: +0.00%
Time Frame: 3 to 4 weeks
New Positions: Yes, see trigger

Company Description:
Logitech is a world leader in products that connect people to the digital experiences they care about. Spanning multiple computing, communication and entertainment platforms, Logitech's combined hardware and software enable or enhance digital navigation, music and video entertainment, gaming, social networking, audio and video communication over the Internet, video security and home-entertainment control. Founded in 1981, Logitech International is a Swiss public company listed on the SIX Swiss Exchange (LOGN) and on the Nasdaq Global Select Market (LOGI). (source: company press release or website)

Why We Like It:
10/02 (James): LOGI spent the better part of a year consolidating lower in a long, slow trend of lower highs and lower lows. It looks like the momentum has changed in the last couple of months. More recently LOGI has surged from $16.00 and created a new higher-high this past week. The move was fueled by short covering. LOGI has about 16% short interest. I believe there is more upside in store but we don't want to chase LOGI at current levels. Wait for a little dip and use a trigger to launch bullish positions at $16.60. We'll put the stop loss near the 50-dma. Our targets are $18.50 and $19.50. FYI: The recent rally has created a new point and figure chart buy signal with a $23 target.

Trigger to open positions @ $16.60

Suggested Position: Buy LOGI stock @ $16.60, stop $ 15.75

Annotated chart:

Entry on October xx at $xx.xx
Earnings Date 10/27/10 (unconfirmed)
Average Daily Volume: 1.6 million
Listed on October 2nd, 2010



NEW BEARISH Plays

FLIR Systems - FLIR - close: 25.74 change: +0.04 stop: 27.55

Target(s): 24.25, 21.00
Key Support/Resistance Areas: 28.00, 27.00, 26.50, 25.50, 24.00
Current Gain/Loss: +0.00%
Time Frame: 4 to 6 weeks
New Positions: Yes, see trigger

Company Description:
FLIR Systems, Inc. is a world leader in the design, manufacture, and marketing of thermal imaging and stabilized camera systems for a wide variety of thermography and imaging applications including condition monitoring, research and development, manufacturing process control, airborne observation and broadcast, search and rescue, drug interdiction, surveillance and reconnaissance, navigation safety, border and maritime patrol, environmental monitoring and ground-based security (source: company press release or website)

Why We Like It:
10/02 (James): In August shares of FLIR broke down from a huge consolidation pattern. The market's widespread rally in September lifted FLIR toward resistance but the stock couldn't breakout. Now shares are under performing their peers and the major indices. Aggressive traders could launch positions now. I think we'll get a better entry point if we wait for a bounce. I'm suggesting a trigger to launch bearish positions at $26.50. If triggered we'll use a stop loss at $27.55. Our first target is $24.25. Our longer, more aggressive target is $21.00 although you may not want to hold over the earnings report! FYI: The point and figure chart is bearish with a $17 target.

Trigger to open positions @ $26.50

Suggested Position: Short FLIR stock @ $26.50, stop loss @ $27.55

Weekly Annotated chart:

Daily Annotated chart:

Entry on October xx at $xx.xx
Earnings Date 10/21/10 (unconfirmed)
Average Daily Volume: 1.7 million
Listed on October 2nd, 2010


PowerShares QQQ Trust - QQQQ - close: 49.01 change: -0.06 stop: 50.05

Target(s): 47.25
Key Support/Resistance Areas: 49.75-50.00, 47.25
Current Gain/Loss: +0.00%
Time Frame: 1 to 2 weeks
New Positions: Yes

Company Description:
The PowerShares QQQ is an exchange traded fund (ETF) based on the NASDAQ-100 index (NDX).

Why We Like It:
Over the next three months I'm actually bullish on the market and the NDX (and QQQQ). Yet short-term this tech-heavy index (ETF) is very overbought and due for a correction. Normally trying to call tops and bottoms can be very dangerous but after a week of moving sideways it looks like the upward momentum is gone. I'm suggesting small bearish positions now. We'll use a stop loss at $50.05. Our short-term target is $47.25 (near the 38.2% Fib retracement). Once the QQQQ has reached our target I would switch directions and start looking for a bullish entry point somewhere in the $47-46 zone. My time frame for this pull back is less than two weeks. Readers may want to consider trading the options instead of the ETF.

Suggested Position: Short the QQQQ stock @ $49.01, stop @ 50.05
- or -
Buy the November 47.00 PUT (current ask $0.96)

Annotated chart:

Entry on October 04 at $xx.xx
Earnings Date --/--/-- (unconfirmed)
Average Daily Volume: 77.6 million
Listed on October xxth, 2010