Editor's Note:

The logic behind tonight's bullish trades:

Everyone is expecting a bad jobs number tomorrow. Last month we were looking for +100K or more and got +18K. Tomorrow economists are expecting between 80K-100K but many have been ratcheting down their estimates toward 50K or lower. The "whisper" number that traders are expecting is actually negative jobs growth. The question you have to ask is "how much of a bad jobs number has already been priced into a stock market that's down -10% in the last two weeks?"

If the jobs number is another disaster will stocks sell off again or will they bounce? I am betting the market will see a bounce and that's why we want to open bullish positions on the these ETFs now. However, we only want to open positions if these ETFs and the S&P 500 index both open in positive territory tomorrow. Listing this conditional entry point could prevent the newsletter from getting triggered.

There is a very real possibility that a bearish jobs number pushes the market lower at the open only to see the market reverse and rocket higher into the closing bell. If this happens, our new bullish plays will not open but you, as an individual, are a lot more nimble. You may want to go ahead and launch positions if the markets turn positive.

FYI: If you're looking for a short/bearish trade consider checking out the volatility ETFs like the VXX or the VIXY. These should contract lower if stocks manage a rebound.

- James


NEW BULLISH Plays

Motorola Mobility Holdings, Inc. - MMI - close: 23.09 chg: +0.81

Stop Loss: 20.70
Target(s): 25.75, 27.75
Current Gain/Loss: unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
MMI delivered a very impressive +3.6% on a day the market's major indices were all down about -5%. That's some impressive relative strength. While the U.S. market is down about eight days in a row the sell-off in MMI stalled late last week. Shares appear to have found a bottom. If that's true, how will MMI perform if the market sees an oversold bounce?

I am suggesting we open bullish positions on MMI if the stock and the S&P 500 index both open in positive territory tomorrow. We will use a stop loss at $20.70. More conservative traders may want to use a tighter stop instead. Our first target is $25.75. Our secondary, more aggressive target is $27.75. We do want to keep our position size small to limit our risk.

open positions if MMI and the S&P500 index open positive tomorrow

Suggested Position: buy MMI stock

- or -

buy the SEP $25 call (MMI1117I25) current ask $1.05

Annotated chart:

Entry on August xx at $ xx.xx
Earnings Date 10/27/11 (unconfirmed)
Average Daily Volume = xxx million
Listed on August 4, 2011


PowerShares QQQ ETF - QQQ - close: 54.17 change: -2.64

Stop Loss: 53.49
Target(s): 55.90, 56.90
Current Gain/Loss: unopened
Time Frame: 1 to 2 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
The stock market is very short-term oversold. We are expecting a bounce. The question is how much of a bearish jobs number is baked in? I am suggesting bullish positions now but only if the QQQ and the S&P500 index both open in positive territory. This should be a very short-term trade that only lasts a few days.

Please see tonight's editor's note for more on adding bullish trades now.

open positions if the QQQ & SP500 index both open positive.

Suggested Position: buy the QQQ

- or -

buy the AUG $57 call (QQQ1120H57) current ask $0.40

- or -

buy the SEP $57 call (QQQ1117I57) current ask $0.85

Annotated chart:

Entry on August xx at $ xx.xx
Earnings Date --/--/--
Average Daily Volume = 70 million
Listed on August 4, 2011


ProShares Ultra Financials - UYG - close: 50.75 change: -5.57

Stop Loss: 49.49
Target(s): 54.50, 56.50
Current Gain/Loss: unopened
Time Frame: 1 to 3 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
Aggressive traders may want to check out the UYG. This is the double-long (2x) financial ETF. Stocks are currently very short-term oversold but if the market can bounce the UYG could outperform to the upside. The recent sell-off has pushed the UYG toward previous support near the $50.00 level.

I am suggesting bullish positions now if the UYG and the S&P500 both open positive tomorrow morning. We should consider this an aggressive, speculative trade. Let's keep our position size small to limit our risk.

Please see tonight's editor's note for more on adding bullish trades now.

open positions if the UYG & SP500 index both open positive.

Suggested Position: buy the UYG

- or -

buy the AUG $53 call (UYG1120H53) current ask $1.96

Annotated chart:

Entry on August xx at $ xx.xx
Earnings Date --/--/--
Average Daily Volume = 1.7 million
Listed on August 4, 2011