NEW BULLISH Plays

E.I. du Pont de Nemours & Co. - DD - close: 56.79 change: +0.04

Stop Loss: 53.95
Target(s): 59.95, 62.50
Current Gain/Loss: + 0.0%
Time Frame: 6 to 8 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
Industrial names were performing well last week and DuPont closed at new multi-year highs. The $54-56 zone has been long-term resistance so the close at new relative highs is very bullish for the stock as it builds on the trend of higher lows. While stocks do look a little short-term overbought here they could get more overbought as fund managers put new money to work now that it's the beginning of May.

I am suggesting we initiate small positions now. More patient traders could wait to buy a dip near $55 or the 30-dma instead. We'll start with a stop loss at $53.95.

Open Small Positions at current levels

Suggested Position: buy DD stock @ current levels

- or -

Buy the June $57.50 call (DD1118F57.5) current ask $1.12

Annotated chart:

Entry on May 2 at $xx.xx
Earnings Date 04/21/11
Average Daily Volume: 4.8 million
Listed on April 30th, 2011


NEW BEARISH Plays

Raytheon Co. - RTN - close: 48.55 change: -0.70

Stop Loss: 50.15
Target(s): 45.25
Current Gain/Loss: - 0.0%
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
It was a rough month for RTN. The stock broke down through several layers of support mid-April. Traders did buy the dip at the 200-dma but the bounce has failed at resistance near $50.00 and its 30-dma. The company just reported earnings this past week and missed by three cents. The fact that congress is trying to slash the U.S. budget, which could impact defense spending, is another black cloud for RTN. The stock could still have support near its 200-dma around $48.00 as well as the potential trendline of higher lows. However, given the failed rally at $50.00 and the stock's underperformance I am suggesting bearish positions now. We do want to keep our positions very small since the market's trend is still up. Readers may want to use put options to limit your maximum risk.

Open Small Bearish Positions now!

Suggested Position: Short RTN stock @ current levels

- or -

Buy the May $47.00 PUTs (RTN1121Q47) current ask $0.32

Annotated chart:

Entry on May 2 at $xx.xx
Earnings Date 04/28/11
Average Daily Volume: 2.6 million
Listed on April 30th, 2011