NEW BULLISH Plays

Baxter Intl. - BAX - close: 53.03 change: +0.48

Stop Loss: 49.90
Target(s): 54.90, 57.50
Current Gain/Loss: unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see trigger

Company Description:
Baxter International Inc., through its subsidiaries, develops, manufactures and markets products that save and sustain the lives of people with hemophilia, immune disorders, infectious diseases, kidney disease, trauma, and other chronic and acute medical conditions. As a global, diversified healthcare company, Baxter applies a unique combination of expertise in medical devices, pharmaceuticals and biotechnology to create products that advance patient care worldwide (source: company press release or website)

Why We Like It:
February has been a strong month for BAX. In late January the company reported earnings and guided lower for the first quarter but it seems that investors don't care. The stock has rallied from $48 to breakout past key resistance at the $52 level. On a short-term basis the stock is overbought but we want to be ready to buy a dip.

Technically broken resistance near $52.00 should be new support but when BAX does see a dip that may not be deep enough. A normal 38.2% Fibonacci retracement of the February rebound would produce a dip towards $51.50-51.25. Cautious traders will want to wait for the dip near $51.00. Currently the market is in an environment where the dips are shallow. We will set our trigger to buy the dip at $52.00. However, we want to keep our position size small to limit our risk.

FYI: The Point & Figure chart for BAX is bullish with a $73 target.

Buy-the-Dip Trigger @ $52.00 (small positions)

Suggested Position: Buy BAX stock @ 52.00

- or -

Buy the May $55 call (BAX1121E55) current ask $1.33

Annotated chart:

Entry on February xx at $xx.xx
Earnings Date 04/21/11 (unconfirmed)
Average Daily Volume: 5.8 million
Listed on February 19th, 2010


Paychex Inc. - PAYX - close: 33.60 change: +0.15

Stop Loss: 32.75
Target(s): 35.90, 37.90
Current Gain/Loss: unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see trigger

Company Description:
Paychex, Inc. is a leading provider of payroll, human resource, and benefits outsourcing solutions for small- to medium-sized businesses. The company offers comprehensive payroll services, including payroll processing, payroll tax administration, and employee pay services, including direct deposit, check signing, and Readychex®. Human resource services include 401(k) plan recordkeeping, section 125 plans, a professional employer organization, time and attendance solutions, and other administrative services for business. A variety of business insurance products, including group health and workers' compensation, are made available through Paychex Insurance Agency, Inc. Paychex was founded in 1971. With headquarters in Rochester, New York, the company has more than 100 offices serving approximately 536,000 payroll clients nationwide as of May 31, 2010. (source: company press release or website)

Why We Like It:
Investors have continued to buy the dips in PAYX. Now key resistance in the $32.50-33.00 level has become new support. Shares just set new two-year highs on Friday after two weeks of consolidating sideways. I am suggesting we take advantage of this move. Open bullish positions now with a stop loss at $32.75. Our upside target is $35.90. We will plan to exit ahead of the late March earnings report.

FYI: The Point & Figure chart for PAYX is bullish with a $50 target.

Open Bullish Positions Now

Suggested Position: Buy PAYX stock @ current levels

- or -

Buy the March $34 calls (PAYX1119C34) current ask $0.50

Annotated chart:

Entry on February 22 at $xx.xx
Earnings Date 03/23/11 (unconfirmed)
Average Daily Volume: 2.1 million
Listed on February 19th, 2010