NEW BULLISH Plays

Morgan Stanley - MS - close: 17.02 change: +0.41

Stop Loss: 15.45
Target(s): 19.75
Current Gain/Loss: unopened
Time Frame: 4 to 8 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
Last week was a big one for MS. The company reported earnings and broke out past resistance at the 50-dma and near the $16.00 level. Following the earnings report traders bought the dip at $16.00, which should now be short-term support.

There is still no resolution in Europe so trading financial stocks can be risky right now. We want to keep our positions in MS pretty small. I am suggesting we open positions on Monday but only if both MS and the S&P 500 index both open positive. Nimble traders may want to wait and try and jump in on a dip near $16.00. I am suggesting a stop loss at $15.45. Our target is $19.75 but I am concerned the 100-dma might be overhead resistance. FYI: The Point & Figure chart for MS is bullish with a $29 target.

*See Play Entry Details Above* (Small Positions)

Suggested Position: buy MS stock @ the open

- or -

buy the NOV $18 call (MS1119K18) current ask $0.74

Annotated chart:

Entry on October xx at $ xx.xx
Earnings Date 10/19/11
Average Daily Volume = 42.8 million
Listed on October 22, 2011


Staples Inc. - SPLS - close: 14.89 change: +0.16

Stop Loss: 14.35
Target(s): 16.75
Current Gain/Loss: unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
SPLS is an office supply company. It looks like the stock has formed a bullish double bottom with the lows in August and October. The last couple of weeks have seen SPLS consolidating under resistance at $15.00. I am suggesting a trigger to launch bullish positions at $15.11. If triggered we'll use a stop loss at $14.35. Our target is %16.75. However, that might be a little optimistic. The exponential 200-dma could be resistance. Plus, SPLS has two rivals, OMX and ODP, both reporting earnings this week. Results from these companies could have a big impact on SPLS.

Trigger @ $15.11

Suggested Position: buy SPLS stock @ 15.11

- or -

buy the NOV $16 call (SPLS1119K16) current ask $0.30

Annotated chart:

Entry on October xx at $ xx.xx
Earnings Date 11/15/11 (confirmed)
Average Daily Volume = 9.2 million
Listed on October 22, 2011


Ultra (long) Russell 2000 ETF - UWM - close: 32.93 chg: +1.35

Stop Loss: 29.85
Target(s): 39.00
Current Gain/Loss: unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
The small cap stocks have seen a big bounce from their October lows but they have yet to breakout like their big cap peers in the S&P 500. When they do this group should outperform to the upside. We are going to leverage that bet by trading the double-long ETF on the Russell 2000 (UWM). Readers need to bear in mind that the small cap index is normally more volatile than the big gaps and this UWM will be twice as a volatile.

I am suggesting a trigger to open small bullish positions at $33.25. If triggered we will use a wide stop loss at $29.85. More conservative traders will want to consider a higher stop loss. There is potential resistance at the late August peak and potential resistance at the simple 100-dma and exponential 200-dma. I am setting our exit target a $39.00.

Trigger @ $33.25 (Small Positions)

Suggested Position: buy the UWM stock @ 33.25

- or -

buy the NOV $35 call (UWM1119K35) current ask $1.90

Annotated chart:

Entry on October xx at $ xx.xx
Earnings Date --/--/--
Average Daily Volume = 3.9 million
Listed on October 22, 2011