Editor's Note:

Is copper's decline over yet? What about this major home improvement retailer? Plus, HAS is still forecasting lower lows.

-James


NEW BULLISH Plays

Copper ETF - JJC - close: 42.49 change: +0.15

Stop Loss: see below
Target(s): 47.50
Current Gain/Loss: unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
The on again, off again concerns over China seeing a hard landing or what some are calling its bubble bursting were definitely in "on" mode back in September. Copper prices plunged drastically on worries of a global economic slowdown.

Yet it seems like last week the price of copper found a bottom. Some would argue that is because the Chinese markets were closed all week for holiday and what we saw was just an oversold bounce. I agree with the oversold bounce idea. As a matter of fact, we still think there is more bounce left. Traders bought the dip in the JJC three times near $39.00 and the big bounce has created a bullish engulfing (reversal) candlestick pattern on the weekly chart. Now these patterns need to see confirmation but I'm suggesting we go ahead and launch bullish positions. Let's talk entry points.

I would prefer to buy a dip back into the $41.50-40.50 zone. We'll set a trigger to buy the JJC (or calls) at $41.00 with a stop loss at $38.85. However, there is no guarantee that JJC will see a dip. It could take off higher instead. We'll set another trigger to open bullish positions at $43.25 with a stop loss at $41.25. We will set our target at $47.50. More conservative traders may want to exit near $46.00 instead.

Two Different Triggers!

Buy-a-Dip trigger at $41.00, stop loss @ 38.85

Buy-a-Breakout trigger at $43.25, stop loss @ 41.25

Suggested Position: buy the JJC (ETF) @ *see above*

- or -

buy the NOV $45 call (JJC1119K45) current ask $1.70

Annotated chart:

Weekly chart:

Entry on October xx at $ xx.xx
Earnings Date --/--/--
Average Daily Volume = 461 thousand
Listed on October 08, 2011


Lowe's Companies - LOW - close: 20.34 change: +0.10

Stop Loss: 19.75
Target(s): 22.85
Current Gain/Loss: unopened
Time Frame: 4 to 8 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
Shares of LOW, a major home-improvement retailer, have been stuck in a trading range for weeks. The market's recent bounce has lifted LOW to the top of the range and shares could see a breakout soon.

I am suggesting a trigger to launch bullish positions at $20.75. If triggered we'll use a stop loss at $19.75. The $22.00 level might be resistance but I'm listing our exit target at $22.85.

I would keep our position size small.

Trigger @ $20.75

Suggested Position: buy LOW stock @ 20.75

- or -

buy the NOV $21 call (LOW1119K21) current ask $0.73

Annotated chart:

Weekly chart:

Entry on October xx at $ xx.xx
Earnings Date 11/14/11 (unconfirmed)
Average Daily Volume = 16.7 million
Listed on October 08, 2011


NEW BEARISH Plays

Hasbro Inc. - HAS - close: 33.25 change: -0.26

Stop Loss: 34.05
Target(s): 30.25
Current Gain/Loss: unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
I was expecting more strength out of HAS following the better than expected September same-store sales data this past week from the retail sector. Unfortunately for HAS shareholders the stock is trading in a bearish trend of lower highs and lower lows and the bounce just failed under $34.00. This is a little bit surprising given that fund managers are looking for yield and HAS has a 3.6% dividend yield.

I would be tempted to launch bearish positions now but we're going to use a trigger to open positions at $32.90. If triggered our target is $30.25. However, please note that we do not have much time. HAS is due to report earnings on October 17th and we do not want to hold over the report. Since we only have a few days we will list the October put instead of Novembers. FYI: The Point & Figure chart is bearish with a $19 target.

NOTE: Investors might want to consider bullish positions when HAS hits support near $30.00. The fourth quarter is generally a bullish one for this toymaker (thanks to Wall Street's focus on holiday shopping).

Trigger @ 32.90

Suggested Position: short HAS stock @ 32.90

- or -

buy the OCT $32.50 PUT (HAS1122V32.5) current ask $0.80

Annotated chart:

Entry on October xx at $ xx.xx
Earnings Date 10/17/11 (confirmed)
Average Daily Volume = 2.3 million
Listed on October 08, 2011