NEW BULLISH Plays

Forest Labs - FRX - close: 35.29 change: +0.62

Stop Loss: 33.95
Target(s): 38.00
Current Gain/Loss: unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
FRX is a drug maker. The stock has been showing relative strength the last couple of weeks. Today mark's a bullish breakout through resistance at the top of its trading range near $35.00.

I want to see a little bit more confirmation. I am suggesting a trigger to open bullish positions at $35.50 and we'll use a stop loss at $33.95. FRX doesn't move super fast so we'll need some patience. We'll aim for $38.00 to start.

Trigger @ 35.50

Suggested Position: buy FRX stock @ (trigger)

- or -

buy the Jul $36 call (FRX1221G36) current ask $1.20

Annotated chart:

Entry on June xx at $ xx.xx
Earnings Date 07/17/12 (unconfirmed)
Average Daily Volume = 1.9 million
Listed on June 06, 2011


NEW BEARISH Plays

Heritage-Crystal Clean - HCCI - close: 17.09 change: -0.82

Stop Loss: 18.25
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:
HCCI is a waste management company for industrial and hazardous waste. The stock is definitely underperforming the market. Shares lost -4.5% while the rest of the market was climbing today. I could not find any news to account for the relative weakness today. However, you'll notice that the volume today was 500,000 shares even. That's almost ten times the normal 55 thousand shares a day.

Before we continue I want to warn you that this is an aggressive trade. The average volume of 55,000 is very, very light, which can lead to sharp intraday spikes. Plus, the most recent data listed short interest at 14% of the very, very small 8.4 million share float. That raises the risk of a short squeeze. Fortunately, momentum is in the bear's favor.

HCCI is breaking down from a three-week consolidation pattern and has broken down under its 200-dma and 300-dma. We want to open small bearish positions at the open tomorrow with a stop loss above today's high (at 18.25). Our target is $14.50.
FYI: The Point & Figure chart for HCCI is bearish with a $14.00 target.

(SMALL positions to limit risk)

Suggested Position: short HCCI stock @ (the open)

Annotated chart:

Entry on June xx at $ xx.xx
Earnings Date 07/23/12 (unconfirmed)
Average Daily Volume = 55 thousand
Listed on June 06, 2011