NEW BULLISH Plays

Kaiser Aluminum - KALU - close: 54.38 change: -0.62

Stop Loss: 51.90
Target(s): 59.75
Current Gain/Loss: + 0.0%
Time Frame: 3 to 5 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
KALU, an aluminum producer, has seen its stock breakout from a multi-month consolidation in the last couple of weeks. Shares just spent the last few days digesting its gains and consolidating sideways. The stock looks poised to extend its gains. I am suggesting bullish positions now with a stop loss at $51.90. More conservative traders could wait for a dip into the $53-52 area as their entry point instead.

Our target is the $59.75 mark since the $60 level looks like resistance. Investors could certainly aim higher. KALU has a high amount of short interest and the stock could experience a short squeeze. We do not want to hold over the early August earnings report but the date is not yet confirmed.

FYI: The Point & Figure chart for KALU is bullish with a $65 target. Plus, investors would like to note that the most recent data listed short interest at 9.9% of the very small 18.5 million share float.

- Small Positions -

Suggested Position: buy KALU @ current levels

- or -

buy the AUG $55 call (KALU1120H55) current ask $2.05

Annotated chart:

Entry on July 11 at $ xx.xx
Earnings Date 08/01/11 (unconfirmed)
Average Daily Volume = 183 thousand
Listed on July 9, 2011


KLA-Tencor - KLAC - close: 42.25 change: -0.28

Stop Loss: 39.95
Target(s): 45.75
Current Gain/Loss: + 0.0%
Time Frame: 6 to 8 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
Semiconductor stocks have seen a significant bounce. While the SOX index has not yet broken the trend of lower highs shares of KLAC have. The breakout in KLAC occurred on Thursday and shares held above support at the 50-dma on Friday. I do consider this trade somewhat more aggressive and higher risk. I'm placing the stop loss at $39.95. More conservative traders may want to consider a stop closer to $41.00 instead. The simple 100-dma is still overhead and might be resistance. Otherwise we're aiming for a move to $45.75. Aggressive traders could aim higher but we do not want to hold over the late July earnings report.

Suggested Position: buy KLAC @ current levels

- or -

buy the AUG $45 call (KLAC1120H45) current ask $1.00

Annotated chart:

Entry on July 11 at $ xx.xx
Earnings Date 07/28/11 (unconfirmed)
Average Daily Volume = 2.4 million
Listed on July 9, 2011


Western Refining Inc. - WNR - close: 20.61 change: +1.06

Stop Loss: 18.45
Target(s): 24.00, 27.50
Current Gain/Loss: unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see trigger

Company Description

Why We Like It:
Watch out! WNR could be seeing a short squeeze. The stock is breaking out to new multi-year highs on Friday after traders immediately bought the morning dip. Honestly, I'm surprised that WNR is not trading higher. The company is a mid-continent refiner so it benefits from the spread between WTI crude oil and Brent crude oil. As of Friday the spread had risen to $20 between the two futures contracts. This is a huge boost to WNR's profit margins who can buy at WTI prices and sell at Brent prices.

Aggressive traders may want to launch positions now. I am suggesting we wait for a dip back to $19.50. More conservative traders could hope for a dip back into the $19.00-18.00 zone. Since we are using a buy-the-dip entry point we are taking the risk that WNR does not pull back and runs away from us.

If triggered at $19.50 we'll use a stop loss at $18.45. If we get stopped out we might try again on a dip or a bounce near $18.00.

FYI: The Point & Figure chart for WNR is bullish with a $28.50 target. Plus, the most recent data listed short interest at 38% of the 54.2 million-share float.

Trigger @ $19.50

Suggested Position: buy WNR stock @ 19.50

- or -

buy the AUG. $22 call (WNR1120H22) current ask $1.00

Annotated chart:

Entry on July xx at $ xx.xx
Earnings Date 08/04/11 (unconfirmed)
Average Daily Volume = 4.0 million
Listed on July 9, 2011