Editor's Note:

The market's major indices continue to march higher but the rally's leadership is narrowing. We're adding both bullish and bearish candidates tonight.

In addition to tonight's new trades check out these candidates.

SBUX - Shares appear to be breaking out higher from their multi-week sideways consolidation. This looks like a bullish candidate but I would not want to hold over the Jan. 26th earnings report.

GRMN - I would keep an eye on GRMN. The stock's consolidation is narrowing. We should see it breakout over resistance near $32 or breakdown under support near $30 in the next couple of weeks (probably less).

ALTR - This semiconductor stock is bouncing some short-term support. I was ready to buy it today with a tight stop loss. However, earnings are due out on Jan. 25th.

UA - Shares just failed at their 50-dma today. This stock looks like a short candidate. However, I would not want to hold over the earnings report on Jan. 27th.

- James


NEW BULLISH Plays

Microchip Technology - MCHP - close: 37.18 change: +0.71

Stop Loss: 35.95
Target(s): 39.95
Current Gain/Loss: +0.0%
Time Frame: 2 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
The SOX semiconductor index rallied off the bottom of its bullish channel breathing new life into the sector's rally. Shares of MCHP is bouncing from a recent test of support near $36 and its 10-dma. I am suggesting very small bullish positions as we try to ride this rebound in the chip sector. Stop loss at $35.95. Our first target is $39.90. However, we will plan to exit ahead of the February 2nd earnings report.

Open small bullish positions now.

Suggested Position: MCHP stock @ current levels

- or -

Buy the 2011 February $38 call (MCHP1119B38) current ask $0.60

Annotated chart:

Entry on January 25 at $xx.xx
Earnings Date 02/02/11 (unconfirmed)
Average Daily Volume: 1.6 million
Listed on January 24th, 2010


NEW BEARISH Plays

Endo Pharmaceuticals - ENDP - close: 33.91 change: +0.23

Stop Loss: 35.75
Target(s): 31.00
Current Gain/Loss: unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see trigger

Company Description

Why We Like It:
The breakdown on January 10th looks like it was a game changer for ENDP's stock. Shares managed an oversold bounce back toward prior support, which is now new resistance. The failed rally there is another bearish development. I am tempted to open bearish positions right now! However, I suspect the market could see another push higher. I'm suggesting we wait for ENDP to bounce to $34.50 and then launch new bearish positions. We'll try and limit our risk with a stop loss at $35.75. If triggered our first target is $31.00.

Trigger @ $34.50

Suggested Position: Short ENDP stock @ 34.50

- or -

Buy the 2011 February $35 PUT (ENDP1119N35)

Annotated chart:

Entry on January xx at $xx.xx
Earnings Date 02/22/11 (unconfirmed)
Average Daily Volume: 1.3 million
Listed on January 24th, 2010