NEW BULLISH Plays

HCI Group, Inc. - HCI - close: 52.54 change: +0.61

Stop Loss: 51.15
Target(s): 58.00
Current Gain/Loss: unopened

Entry on December -- at $--.--
Listed on December 28, 2013
Time Frame: 6 to 8 weeks
Average Daily Volume = 205 thousand
New Positions: Yes, see below

Company Description

Why We Like It:
This is a momentum trade. HCI, formerly known as Homeowners Choice, Inc., is in the financial sector. The company offers property and casualty insurance products. It has been an impressive year for HCI stock with shares ended the week near all-time highs. Analysts expectations for HCI's earnings are also rising. Yet there seem to be plenty of investors betting against the stock. The most recent data listed short interest at 23% of the very, very small 9.6 million share float. Additional gains from here could spark more short covering.

I am suggesting a trigger to open small bullish positions at $53.05. If triggered our target is $58.00. If you're patient you could try aiming higher. The Point & Figure chart for HCI is bullish with a long-term $74 target.

Trigger @ 53.05

Suggested Position: buy HCI stock @ (trigger)

Annotated chart:



Walter Energy, Inc. - WLT - close: 16.72 change: +1.12

Stop Loss: 15.45
Target(s): 19.25
Current Gain/Loss: unopened

Entry on December -- at $--.--
Listed on December 28, 2013
Time Frame: 6 to 8 weeks
Average Daily Volume = 6.0 million
New Positions: Yes, see below

Company Description

Why We Like It:
WLT is in the basic materials sector. The company products both metallurgical coal and thermal coal. The long, dark decline for WLT stock might finally be over. It seems that shares found a real bottom this past summer. WLT has been trying to rally since it bounced from the $10 level. The stock hit some serious profit taking when it encountered the 200-dma back in November. The recent bounce would suggest that the correction is over. This past week has seen WLT breakout past resistance near $16.00 and its 50-dma and 200-dma.

If this rally continues WLT could see a short squeeze. The most recent data listed short interest at 37% of the 62.2 million share float. I am labeling this trade as an aggressive, higher-risk trade because WLT can be so volatile. We're suggesting small bullish positions at the opening bell on Monday. Our short-term target is $19.25. FYI: The Point & Figure chart for WLT is bullish with a $21.00 target.

*Launch small positions at the opening bell*

Suggested Position: buy WLT stock @ (the open)

- (or for more adventurous traders, try this option) -

buy the Feb $17 call (WLT1422B17) current ask $1.64

Annotated chart:

Weekly chart: