Editor's Note:

In addition to tonight's new plays these stocks caught my eye and might offer a short-term trading opportunity.

KMX - Shares of CarMax Inc. have been showing relative strength this past week with a strong gain and a breakout past resistance near $32.00. Aggressive trades could open bullish positions now. I'd wait for a little pull back.

CVH - Coventry Health Care looks vulnerable. Shares are flirting with the late November lows. Readers could use a trigger under $29.00 as a bearish entry point.

IRM - Iron Mountain Inc. is on the verge of a significant breakout. Readers could use a trigger at $32.25 as a bullish entry point.

RGR - Tonight we're listing SWHC as a possible trade. Readers will also want to keep an eye on rival Ruger. RGR soared to new highs on Friday but I would not chase Friday's big pop higher. Wait for a bounce in the $36.75 area before considering new positions.

-James


NEW BULLISH Plays

SAIC, Inc. - SAI - close: 13.02 change: -0.09

Stop Loss: 12.74
Target(s): 14.50
Current Gain/Loss: unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
SAI provides technical services to a variety of government and commercial clients. The stock appears to have bottomed with the lows in October and November. Shares are now in the process of breaking out past resistance near $13.00.

I am suggesting small bullish positions at the open but only if both SAI and the S&P 500 open positive. We'll use a tight stop loss under Friday's low. Our target is $14.50 but I have to warn you that I see potential resistance near $13.50, and the 150-dma, the exponential 200-dma and the simple 200-dma.

*See Entry Details Above* (Small Positions)

Suggested Position: buy SAI stock @ the open

- or -

buy the Feb $12 call (SAI1218B12) current ask $1.20

Annotated chart:

Entry on January xx at $ xx.xx
Earnings Date 03/22/12 (unconfirmed)
Average Daily Volume = 1.7 million
Listed on January 14, 2011


Smith & Wesson Holding Corp. - SWHC - close: 4.80 change: +0.14

Stop Loss: 4.45
Target(s): 5.65 or 6.40
Current Gain/Loss: unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
SWHC makes firearms. You may not be aware of it but gun sales have been soaring in the past twelve months. Background checks are at record highs. Oddly enough shares of SWHC didn't start really moving higher until last December. The current rally actually started just prior to its earnings report on December 8th. SWHC beat estimates by five cents but then issued an earnings warning. You would have thought shares would have reversed lower. Instead the rally accelerated.

The stock has been pushing through significant resistance levels very consistently in the past six weeks. During that same time frame SWHC is up +60%. Normally I would never consider buying a stock that looks this overbought but Friday's bounce from new short-term support at $4.50 looks like an entry point. You'll notice on the daily chart that volume has been surging on the up days. That's normally a pretty good sign.

I do consider this a very aggressive trade and we want to keep our position size small. I am suggesting we open bullish positions at the open but only if both SWHC and the S&P 500 open positive. If opened we'll use a stop at $4.45. Now the $5.00 level could be resistance but we're going to aim higher. I am setting two different targets depending on your risk tolerance. I'd aim for $5.65 or $6.40. FYI: The Point & Figure chart for SWHC is bullish with a long-term $9.50 target.

NOTE: Nimble traders may want to try and time an entry on a dip near $4.70.

*See Entry Details Above* (Small Positions)

Suggested Position: buy SWHC stock @ the open

Annotated chart:

Entry on January xx at $ xx.xx
Earnings Date 03/12/12 (unconfirmed)
Average Daily Volume = 962 thousand
Listed on January 14, 2011