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BRL None
CME  
PH  

New Calls

Barr Pharma - BRL - close: 48.53 chg: +0.79 stop: 45.40

Company Description:
Barr Pharmaceuticals, Inc., a holding company that operates through its principal subsidiaries, Barr Laboratories, Inc. and Duramed Pharmaceuticals, Inc., is engaged in the development, manufacture and marketing of generic and proprietary pharmaceuticals. (source: company website)

Why We Like It:
Drug stocks have not been the best performers over the last year or so but that could be about to change. The DRG index appears to be on the verge of a significant upside breakout. We like BRL because the stock could help lead its brethren higher. The stock has been a very strong out performer compared to its peers with a significant up trend over the last several months. Technically we like today's bullish breakout from a two-month consolidation between $45.00 and $48.50. The MACD has produced a new buy signal, BRL has an RSI oscillator breakout, and its P&F chart is bullish with a $61 price target. Our strategy is to go long now with a $54-55 price target. Our time horizon is early May so BRL has two months to reach our target.

Suggested Options:
We are going to suggest the May calls as BRL doesn't move that fast so we need time for shares to appreciate.

BUY CALL MAY 45 BRL-EI OI=1750 current ask $4.60
BUY CALL MAY 50 BRL-EJ OI=1811 current ask $1.85


 

Picked on March 01 at $ 48.53
Change since picked: + 0.00
Earnings Date 02/02/05 (confirmed)
Average Daily Volume = 800 thousand

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Chicago Merc. Exchg - CME - cls: 220.00 chg: +13.38 stop: 206.00

Company Description:
Chicago Mercantile Exchange Inc. is the largest futures exchange in the United States. As an international marketplace, CME brings together buyers and sellers on CME Globex(R) electronic trading platform and on its trading floors. CME offers futures and options on futures primarily in four product areas: interest rates, stock indexes, foreign exchange and commodities. The exchange moved about $1.5 billion per day in settlement payments in 2004 and managed $44.1 billion in collateral deposits at Dec. 31, 2004, including $3.1 billion in deposits for non-CME products. (source: company website)

Why We Like It:
Before we begin we want to state that this is a higher-risk, aggressive play. CME can be prone to volatility and we normally don't like to chase a big move. However, we're tempted to make an exception with CME today based on the news and its bullish breakout. The company reported this morning that its average daily volume of contracts traded in February had risen to a record of 3.8 million. This is close to a 50 percent increase from February a year ago. More trading volume obviously means more profits for CME and investors pushed the stock higher on volume well above average. The stock closed right at round-number, psychological resistance at the $220.00 mark. We are willing to speculate (with a small position) given the positive turn around in its technical picture. RSI is breaking out. Stochastics are now bullish. Its P&F chart points to a $286 price target. We do see resistance near the $230 level but after its January bounce from the 38.2 percent Fibonacci retracement level (see chart) we're expecting CME to attempt a breakout. Our eight-week price target is $240.00 but short-term players can target the $230 level. Please note we are going to use a TRIGGER to open the play. We want to see some follow through so we will not go long until CME trades at $221.01.

Suggested Options:
Remember this is a higher-risk, aggressive play. We're suggesting the June calls.

BUY CALL JUN 220 CMJ-FD OI= 826 current ask $15.40
BUY CALL JUN 230 CMJ-FF OI= 578 current ask $11.00
BUY CALL JUN 240 CMJ-FH OI= 314 current ask $ 7.70


 

Picked on March xx at $xxx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 02/01/05 (confirmed)
Average Daily Volume = 817 thousand

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Parker-Hannifin - PH - close: 67.53 change: +1.73 stop: 63.99

Company Description:
With annual sales exceeding $7 billion, Parker Hannifin is the world's leading diversified manufacturer of motion and control technologies and systems, providing precision-engineered solutions for a wide variety of commercial, mobile, industrial and aerospace markets. The company employs more than 48,000 people in 46 countries around the world. Parker has increased its annual dividends paid to shareholders for 48 consecutive years, among the top five longest-running dividend-increase records in the S&P 500 index. (source: company website)

Why We Like It:
Fundamental traders may want to do more homework on PH before considering any plays. The company's latest earnings report wasn't that rosy and its results sparked the big drop in mid-January. Fortunately, the picture appears to be growing a bit brighter as more than one analyst has upgraded the stock in recent weeks suggesting PH is a buy on valuation. We believe the recent post-earnings consolidation is about over and the higher low last week is good news. Volume has been very strong the last several days suggesting increasing buying pressure as funds do some bargain shopping. The P&F chart is very bullish with a long-term $127 price target and shares are about to produce a new buy signal soon. Plus PH's RSI oscillator is breaking out. There is potential resistance at the $70-71 range but we don't think it will stop PH's next leg higher. Our strategy is to use a TRIGGER at $68.11 to confirm today's move over the 50-dma. More conservative traders may want to wait for PH to trade over its simple 50-dma. Our initial target is the $73-75 range.

Suggested Options:
We are suggesting the May calls.

BUY CALL MAY 65 PH-EM OI= 157 current ask $4.90
BUY CALL MAY 70 PH-EN OI= 400 current ask $2.20
BUY CALL MAY 75 PH-EO OI= 730 current ask $0.85

Picked on March xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 01/18/05 (confirmed)
Average Daily Volume = 1.0 million

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