Editor's Note:

Investors need to be careful here. We are facing the possibility that Ben Bernanke could disappoint the markets on Friday. Therefore we need to keep our position size pretty small to limit our risk.

- James


NEW BULLISH Plays

Ultra Oil & Gas ETF - DIG - close: 40.65 change: +3.33

Stop Loss: 36.75
Target(s): 48.50
Current Gain/Loss: unopened
Time Frame: 2 to 6 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
The DIG is the double-long (2x) ETF focused on the Dow Jones U.S. Oil & Gas index. The group was hammered in the late July and early August sell-off. Now it looks like the market and oil stocks could be forming a bullish double bottom.

I am suggesting small bullish positions now but only if both the DIG and the S&P500 both open positive tomorrow. The low this week has been $36.94 and the August low was $35.78. We will use a stop loss at $36.75. More aggressive traders may want to place their stop lower.

There is potential short-term resistance at $44.00 but We're aiming for a rally to $48.50.

open small bullish positions if DIG & the S&P500 both open positive tomorrow.

Suggested Position: buy this ETF @ open

- or -

buy the SEP $45 call (DIG1117I45) current ask $1.50

Annotated chart:

Entry on August xx at $ xx.xx
Earnings Date --/--/--
Average Daily Volume = 1.4 million
Listed on August 23, 2011


Steel ETF - SLX - close: 51.87 change: +2.17

Stop Loss: 49.45
Target(s): 55.75, 59.75
Current Gain/Loss: unopened
Time Frame: 2 to 6 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
The SLX mimics the NYSE Arca Steel Index. This ETF appears to have found significant support near the $50.00 level, which was also support and resistance back in 2009. Now the SLX is forming what looks like a bullish double bottom pattern. I am suggesting we take advantage of the bounce to launch new bullish positions but only if the SLX and the S&P500 both open positive tomorrow morning. We need to keep our position size small. I am concerned that Bernanke might disappoint investors on Friday and his comments could send the market lower very fast.

We'll use a stop loss at 49.45. Our first target is $55.75. Our second, more aggressive target is $59.75. Note, the option spreads are a little wide.

open small bullish positions if SLX & the S&P500 both open positive tomorrow.

Suggested Position: buy this ETF @ open

- or -

buy the SEP $55 call (SLX1117I55) current ask $1.30

Annotated chart:

Entry on August xx at $ xx.xx
Earnings Date --/--/--
Average Daily Volume = 126 thousand
Listed on August 23, 2011