Editor's Note:

In spite the recent volatility in stocks the market's trend remains higher. I am cautiously bullish but readers will want to seriously consider keeping their position size small to limit your risk. Normally the market gets frothy (more volatile) at tops and bottoms.

Check out these two stocks as potential trades:

DIN is consolidating above support near $54.00. The company recently reported some disappointing earnings but the stock failed to sell-off. I am tempted to buy the bounce but readers may want to wait for a breakout past $60.00.

SXI has very low volumes, which can make trading the stock somewhat challenging. However, aggressive traders might want to consider buying the dip on Friday. Thursday's move produced a strong bullish breakout over resistance at $34.50 but the rally stalled at $37.00. The $37.00 level is major resistance dating back several years. You could buy the stock now or wait for a breakout past $37.00.

- James


NEW BULLISH Plays

Cabot Microelectronics - CCMP - close: 49.86 change: -0.14

Stop Loss: 47.95
Target(s): 54.75
Current Gain/Loss: unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see trigger

Company Description

Why We Like It:
CCMP has spent the last two weeks consolidating sideways in the $48-50 range. Now shares are poised to breakout past resistance at $50.00. I am suggesting a trigger to launch bullish positions at $50.25. If triggered we'll use a stop loss at $47.95. Our target is $54.75.

FYI: The most recent data listed short interest at 13% of CCMP's small 22.75 million share float. That raises the chances for a short squeeze.

Trigger @ 50.25

Suggested Position: Buy CCMP stock @ $50.25

- or -

Buy the April $50 calls (CCMP1116D50) current ask $2.10

- or -

Buy the April $55 calls (CCMP1116D55) current ask $0.40

Annotated chart:

Entry on March x at $xx.xx
Earnings Date 04/21/11 (unconfirmed)
Average Daily Volume: 211 thousand
Listed on March 5th, 2010


Jos. A Bank Clothiers Inc. - JOSB - close: 45.90 change: -1.53

Stop Loss: 44.75
Target(s): 49.85, 52.25
Current Gain/Loss: + 0.0%
Time Frame: 4 to 6 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
The positive jobs report data should be good news for companies like JOSB. More jobs for the economy means more consumers with cash and more people updating their wardrobe. At the same time the rising price of oil and gas is negative for retailers since more money in the gas tank leaves less money for other items. That's why we want to keep our position size in JOSB pretty small to limit our risk. The stock has pulled back to short-term support near $45.00. I am suggesting we launch bullish positions now near $45 with a stop loss at $44.75. Our first target is $49.85 since the $50.00 mark could be round-number, psychological resistance. I am tentatively setting a secondary target at $52.25 given the chance for a short squeeze.

The earnings date at the end of March is not yet confirmed but it does put a four to five week time frame on this trade.

FYI: The most recent data listed short interest at almost 25% of JOSB's 27.3 million-share float. There is definitely room for some short covering here. Plus, the Point & Figure chart for JOSB is bullish with a $62 target.

- Open Small Bullish Positions -

Suggested Position: Buy JOSB stock @ current levels

- or -

Buy the April $50 calls (JOSB1116D50) current ask $1.05

Annotated chart:

Entry on March 7 at $xx.xx
Earnings Date 03/30/11 (unconfirmed)
Average Daily Volume: 355 thousand
Listed on March 5th, 2010