NEW BULLISH Plays

Peabody Energy - BTU - close: 41.60 change: +1.94

Stop Loss: 38.45
Target(s): 47.00
Current Gain/Loss: unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
Most of the coal stocks have staged a strong rebound off their October lows and appear to be breaking out from a two-week sideways consolidation. We like BTU because shares are showing relative strength with a rally past technical resistance at its 50-dma.

I am suggesting we open small bullish positions tomorrow but only if both BTU and the S&P 500 index can open in positive territory. If triggered we'll use a stop loss at $38.45. Our target is $47.00. FYI: The Point & Figure chart for BTU is bullish with a $50 target.

*See Entry Details Above*

Suggested Position: buy BTU stock @ the open

- or -

buy the NOV $45 call (BTU1119K45) current ask $0.00

Annotated chart:

Entry on October xx at $ xx.xx
Earnings Date 01/24/12 (unconfirmed)
Average Daily Volume = 6.6 million
Listed on October 26, 2011


Red Hat, Inc. - RHT - close: 48.23 change: +1.77

Stop Loss: 45.95
Target(s): 54.75
Current Gain/Loss: unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
Software company RHT has seen its stock make an impressive rebound from its October lows. Shares are now challenging resistance near its all-time highs. A breakout past $49.00 would be very bullish and could signal a new leg higher.

I am suggesting that we launch small bullish positions at $49.05 with a stop loss at $45.95. We want to keep it small because RHT is arguably still short-term overbought. If triggered our target is $54.75. FYI: The Point & Figure chart for RHT is bullish with a $54 target.

Trigger @ $49.05

Suggested Position: buy RHT stock @ 49.05

- or -

buy the NOV $50 call (RHT1119K50) current ask $1.10

Annotated chart:

Entry on October xx at $ xx.xx
Earnings Date 12/21/11 (unconfirmed)
Average Daily Volume = 2.8 million
Listed on October 26, 2011