NEW BULLISH Plays

Stamps.com - STMP - close: 27.16 change: -0.23

Stop Loss: 25.90
Target(s): 32.50
Current Gain/Loss: unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
Shares of STMP continue to stair-step higher month after month. The market's recent weakness has pulled STMP back down to the bottom of its November trading range. This looks like an opportunity to hop on board. However, STMP can be a volatile stock and the market looks fragile here. We want to keep our position size small.

I am suggesting we open bullish positions on Monday morning but only if both STMP and the S&P 500 index open positive. If triggered we'll use a stop loss at $25.90. I am tempted to place our stop loss at $24.90 instead but I'm trying to limit our risk.

FYI: The Point & Figure chart for STMP is bullish with a $40 target.

*See Entry Details Above*

Suggested Position: buy STMP stock @ the open

- or -

buy the Feb $30 call (STMP1218C30) current ask $2.70

Annotated chart:

Entry on November xx at $ xx.xx
Earnings Date 02/09/12 (unconfirmed)
Average Daily Volume = 646 thousand
Listed on November 19, 2011


NEW BEARISH Plays

Forest Labs Inc. - FRX - close: 29.29 change: -0.08

Stop Loss: 30.55
Target(s): 25.25
Current Gain/Loss: unopened
Time Frame: 9 to 12 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
Shares of FRX, a drug maker, have been suffering with a trend of lower highs and lower lows for months and it doesn't appear to be slowing down. Currently the stock is testing its early October low. A breakdown here could launch FRX into a new leg lower.

I am suggesting a trigger to open bearish positions at $28.95. If triggered we'll use a stop loss at $30.55. Our multi-week target is $25.25. FRX doesn't move very fast so we have to give it some time. FYI: The Point & Figure chart for FRX is bearish with a $19 target.

NOTE: You may want to trade the options instead of the stock to limit risk. FRX has about 6 or 7 days worth of short interest (approximately 9% of the float). Looking at the chart you can see the super sharp bounces caused by short covering.

Trigger @ 28.95

Suggested Position: short FRX stock @ 28.95

- or -

buy the FEB $30 put (FRX1218N30) current ask $2.20

Annotated chart:

Entry on November xx at $ xx.xx
Earnings Date 01/17/12 (unconfirmed)
Average Daily Volume = 2.5 million
Listed on November 19, 2011