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BZH None None
MRVL    

New Calls

Beazer Homes - BZH - close: 68.78 chg: +0.53 stop: 64.74

Company Description:
Beazer Homes USA, Inc., headquartered in Atlanta, is one of the country's ten largest single-family homebuilders with operations in Arizona, California, Colorado, Delaware, Florida, Georgia, Indiana, Kentucky, Maryland, Mississippi, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Texas, Virginia and West Virginia and also provides mortgage origination and title services to its homebuyers. (source: company press release or website)

Why We Like It:
It might seem a bit odd to consider bullish call positions in a homebuilder in a rising interest rate environment. The yield on the 10-year bond has risen sharply lately and that's putting pressure on mortgage rates, which have risen to levels not seen since 2003. Yet historically speaking mortgage rates remain relatively low. Plus, there have been renewed comments that the Fed might be nearing the end of its tightening cycle. We also recently entered the spring/summer building and selling season for homes so maybe investors are counting on a few strong quarters from the builders. Several stocks in the group appear to have built an inverse or bullish head-and-shoulders pattern and they're all on the verge of breaking out above resistance at the neckline of this pattern. BZH is one such stock and today's gain looks like a breakout. We are going to suggest calls here but the 100-dma (near $69.00) and the $70.00 mark could still offer resistance so more conservative traders may want to wait for a move over $70.00 before initiating positions. Currently the P&F chart points to an $87 target but if BZH can trade over $69.00 it will produce a new triple-top breakout buy signal. We are going to target the $74.50-75.00 range. However, please keep in mind that this will be a short-term play. We do not want to hold over the April 27th earnings report.

Suggested Options:
We are suggesting the May calls but we plan to exit on April 26th to avoid holding over earnings.

BUY CALL MAY 65.00 BAD-EM open interest= 483 current ask $6.10
BUY CALL MAY 70.00 BAD-EN open interest=1539 current ask $3.20

Picked on April 06 at $ 68.78
Change since picked: + 0.00
Earnings Date 04/27/06 (confirmed)
Average Daily Volume = 1.2 million

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Marvell Tech. - MRVL - close: 60.18 change: +2.21 stop: 54.99

Company Description:
Marvell is the leader in development of storage, communications, and consumer silicon solutions. The company's diverse product portfolio includes switching, transceiver, communications controller, wireless and storage solutions that power the entire communications infrastructure including enterprise, metro, home and storage networking. (source: company press release or website)

Why We Like It:
The SOX semiconductor index has reversed course. After a five-week consolidation pattern the semis have rebounded and now the SOX index is breaking out over the 520 level and technical resistance at the 50-dma. Strength in the sector is helping fuel as rebound and a breakout in MRVL. The stock spent about three weeks consolidating between $54.00 and $58.00 and now shares are breaking out on rising volume. The technical picture is positive and today's high-volume move is a breakout over the $60.00 mark and its 100-dma. We also like the Point & Figure chart, which looks very bullish for MRVL and currently points to a $73 target. We are suggesting bullish positions above $58.00 and our target is going to be the $65.50-66.00 range. The next level of resistance appears to be $66.50-67.00.

Suggested Options:
We are suggesting the May calls.

BUY CALL MAY 55.00 UVM-EK open interest=4335 current ask $7.40
BUY CALL MAY 57.50 UVM-EY open interest=2156 current ask $5.80
BUY CALL MAY 60.00 UVM-EL open interest=4951 current ask $4.40
BUY CALL MAY 62.50 UVM-ES open interest=2652 current ask $3.30

Picked on April 06 at $ 60.18
Change since picked: + 0.00
Earnings Date 05/25/06 (unconfirmed)
Average Daily Volume = 5.9 million
 

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