NEW BULLISH Plays

VeriFone Systems - PAY - close: 39.60 change: +0.99

Stop Loss: 37.95
Target(s): 44.85
Current Gain/Loss: unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
There is a revolution coming. At least that is what proponents of the digital wallet industry would like you to believe. PAY manufacturers a number of payment solutions and they could benefit from the tech rollout for this new way to make your purchases.

Bears can argue that PAY is short-term overbought but then so is most of the stock market these days. Bulls can point to what looks like a bullish double bottom. Currently PAY is poised to breakout past resistance near $40.00 and its 100-dma. The September high was $40.38. I am suggesting a trigger to open bullish positions at $40.50. We will aim for $44.85 as our exit target. More conservative traders may want to exit near the 200-dma. FYI: The Point & Figure chart for PAY is bullish with a $59 target.

Trigger @ 40.50

Suggested Position: buy PAY stock @ $40.50

- or -

buy the NOV $42 call (PAY1119K42) current ask $1.30

Annotated chart:

Entry on October xx at $ xx.xx
Earnings Date 12/01/11 (unconfirmed)
Average Daily Volume = 2.3 million
Listed on October 13, 2011


Starbucks Corp. - SBUX - close: 42.22 change: +1.13

Stop Loss: 40.80
Target(s): 46.00
Current Gain/Loss: unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
When I look at SBUX as a bullish play I cringe a little bit when I see the huge +20% rally in SBUX in the last two weeks (low of $35 to $42) but there is no denying the stock's relative strength. Investors are obviously not worried about a slow down in the consumer, at least for SBUX. Shares broke out above resistance at $42.00 and closed at new all-time, record highs on Friday. This is significant. There is no overhead supply. No one is waiting to sell if SBUX would only get back to where they bought it. I do consider this an aggressive trade. We're definitely chasing the move. However, SBUX could extend its gains as money managers chase performance. Many funds end their fiscal year on October 31st. How many of them would like to have SBUX, at all-time highs, showing in their portfolio at the end of the month?

We want to open small bullish positions now but only if SBUX and the S&P 500 index both open positive on Monday morning. We'll tentatively set our exit target at $46.00 but we'll need to be nimble. I'm suggesting a stop loss at $40.80. FYI: The Point & Figure chart for SBUX is bullish with a $57 target.

*See Entry Point Details Above* (Small positions)

Suggested Position: buy SBUX stock @ the open

- or -

buy the NOV $44 call (SBUX1119K44) current ask $1.13

Annotated chart:

Entry on October xx at $ xx.xx
Earnings Date 11/03/11 (unconfirmed)
Average Daily Volume = 8.5 million
Listed on October 13, 2011