NEW BULLISH Plays

KB Home - KBH - close: 6.82 change: +0.03

Stop Loss: 6.25
Target(s): 8.75
Current Gain/Loss: unopened
Time Frame: 4 to 8 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
Most of the homebuilding stocks have been sliding lower for months. Yet it looks like they may have found a bottom in recent weeks. Shares of KBH has been churning sideways in the $5.00-7.00 zone. The August and October lows look like a potential bullish double bottom. Traders were quick to buy the dip at $6.30 midday. KBH could easily see a short squeeze. The most recent data listed short interest at 51% of the 65-million share float.

I am listing two different entry point strategies. First I am suggesting we open bullish positions now at current levels but only if both KBH and the S&P 500 index open positive tomorrow morning. If that entry requirement is not met but KBH rallies past $7.00 anyway, then we want to open positions at $7.10 regardless of what the market might be doing. We will use a stop loss at $6.25 for both entry points. Our multi-week target is $8.75 but we'll need to keep a wary eye on the 100-dma as possible resistance.

This is an aggressive trade. We want to keep our position size small to limit our risk.

*See Entry Details Above* (small positions)

Suggested Position: buy KBH stock @ (see above)

- or -

buy the NOV $7.00 call (KBH1119K7) current ask $0.53

- or -

buy the 2012 JAN $7.50 call (KBH1221A7.5) current ask $0.75

Annotated chart:

Entry on October xx at $ xx.xx
Earnings Date 01/09/12 (unconfirmed)
Average Daily Volume = 4.4 million
Listed on October 13, 2011


SuccessFactors, Inc. - SFSF - close: 25.59 change: +0.75

Stop Loss: 23.90
Target(s): 29.50
Current Gain/Loss: unopened
Time Frame: 4 to 8 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
SFSF is part of the cloud-based computing industry, a hot topic these days. It looks like the stock has found a bottom. Shares are beginning to breakout past the trendline of lower highs and breakout past resistance near $25.00. The Point & Figure chart for SFSF is bullish with a $36 target.

I am suggesting we open positions now but only if both SFSF and the S&P 500 index both open positive tomorrow morning. We'll use a stop loss at 23.90. More aggressive traders may want to place their stop under the 50-dma instead. Our multi-week target is $29.50 but don't be surprised to see some resistance near $28.00.

*See Entry Point Details Above*

Suggested Position: buy SFSF stock @ the open

- or -

buy the NOV $27 call (SFSF1119K27) current ask $1.50

Annotated chart:

Entry on October xx at $ xx.xx
Earnings Date 10/26/11 (unconfirmed)
Average Daily Volume = 1.8 million
Listed on October 13, 2011