Editor's Note:

Does the rally continue? Or do stocks finally correct lower with some overdue profit taking? It looks like the stock market is at a pivotal point following a multi-day rally. We're adding both a long and a short play tonight.

In addition to tonight's new trades consider these symbols as well:

VECO - shares have not participated in the market's rally the last few days. You could use a drop under $26.00 as a new bearish entry point.

LTD - This stock is trading near its highs. A breakout past $43.00 could be a new bullish entry point.

BMC - The action here is bearish. Broken support in the $37-38 zone should be resistance. I'd be tempted to launch bearish positions here with a stop above today's high or above $38.00.

-James


NEW BULLISH Plays

NetApp, Inc. - NTAP - close: 38.89 change: +0.24

Stop Loss: 37.95
Target(s): 44.00
Current Gain/Loss: unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
NTAP has seen a huge bounce from $33.00 to $39.00. Shares are clearly short-term overbought. However, if NTAP can breakout past resistance near $39.00 then it could see more short covering and another surge higher.

I do consider this an aggressive trade so we will want to keep our position size small. The plan is to open bullish positions if NTAP can trade at $39.55. If triggered we'll use a stop loss at $37.95. Our upside target is $44.00. Remember, small positions!

Trigger @ $39.55 (small positions)

Suggested Position: buy NTAP stock @ 39.55

- or -

buy the NOV $40 call (NTAP1119K40) current ask $2.00

Annotated chart:

Entry on October xx at $ xx.xx
Earnings Date 11/16/11 (unconfirmed)
Average Daily Volume = 7.4 million
Listed on October 12, 2011


NEW BEARISH Plays

Walgreen Co. - WAG - close: 33.15 change: -0.64

Stop Loss: 34.26
Target(s): 30.50
Current Gain/Loss: +0.0%
Time Frame: 4 to 8 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
The trend for shares of this drug store operator is down. Recent same-store September sales were positive but slightly under expectations. Also depressing the stock is a legal dispute with ESRX. Looking at the chart you can see that WAG's oversold bounce just failed at resistance near $34.00. This looks like an entry point for bearish trades.

I am suggesting bearish positions now with a stop above today's high. Our target is $30.50.

NOTE: October options only have seven trading days left.

Suggested Position: short WAG stock @ the open

- or -

buy the Oct. $32 put (WAG1122V32) current ask $0.23

- or -

buy the NOV $31 put (WAG1119W31) current ask $0.60

Annotated chart:

Entry on October 13 at $ xx.xx
Earnings Date 12/21/11 (unconfirmed)
Average Daily Volume = 8.6 million
Listed on October 12, 2011