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MAN None None
RAI    

New Calls

Manpower - MAN - close: 65.27 change: +2.27 stop: 64.45

Company Description:
Manpower Inc. is a world leader in the employment services industry; creating and delivering services that enable its clients to win in the changing world of work. The $16 billion company offers employers a range of services for the entire employment and business cycle including permanent, temporary and contract recruitment; employee assessment and selection; training; outplacement; outsourcing and consulting. (source: company press release or website)

Why We Like It:
We are cautiously adding new bullish call candidates to the play list. The major market indices are bouncing and bouncing strongly but they remain inside their bearish trends for now. This could be nothing more than a correction on the way down. Therefore traders entering new call plays will probably want to keep their finger ready to hit the sell button and exit quickly. MAN looks like a decent bullish candidate. The consolidation appears to be ending. Shares have produced a double-bottom (bullish pattern) in the last couple of weeks and now shares have broken out above its trendline of lower highs (see chart). We want to see some confirmation so we're suggesting a trigger at $66.05 to buy calls. If triggered then we'll target the $69.85-70.00 range, under what appears to be resistance near $70.00. This is somewhat aggressive since MAN is still showing a bearish Point & Figure chart with a $55.00 target. We do not want to hold over the mid-July earnings report.

Suggested Options:
We are suggesting the July calls.

BUY CALL JUL 65.00 MAN-GM open interest=104 current ask $3.20
BUY CALL JUL 70.00 MAN-GN open interest= 78 current ask $1.15

Picked on June xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 07/18/06 (unconfirmed)
Average Daily Volume = 959 thousand

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Reynolds American - RAI - cls: 111.15 chg: +2.41 stop: 107.45

Company Description:
Reynolds American Inc. is the parent company of R.J. Reynolds Tobacco Company, Conwood Company, L.P., Santa Fe Natural Tobacco Company, Inc., Lane Limited and R.J. Reynolds Global Products, Inc. R.J. Reynolds Tobacco Company, the second-largest U.S. tobacco company, manufactures about one of every three cigarettes sold in the country. (source: company press release or website)

Why We Like It:
RAI looks like another attractive bullish candidate but again we want to caution traders about opening call positions. The two-day bounce in the markets may be just a bounce. RAI looks tempting because the short-term technical oscillators like the RSI and stochastics are turning positive. Plus, the MACD indicator is nearing a new buy signal. Meanwhile the P&F chart is very bullish with a $148.00 target. The daily chart also shows RAI bouncing from technical support at its rising 100-dma (twice in the last couple of weeks). Today's rally also appears to be a breakout above its five-week trendline of lower highs (resistance). We're going to suggest calls with RAI above $110. We're going to suggest two targets. Our conservative target is $115.00. Our aggressive target is $119.00. We would keep a wary eye on larger rival Altria (MO), which has a bearish chart. A breakdown in MO would probably weigh on shares of RAI. The P&F chart for MO is bearish and points to $62.00.

Suggested Options:
We are suggesting the July or August calls for RAI. We do not want to hold over the late July earnings report.

BUY CALL JUL 110.00 RAI-GB open interest=498 current ask $4.30
BUY CALL JUL 115.00 RAI-GC open interest=429 current ask $1.65

BUY CALL AUG 110.00 RAI-HB open interest=1537 current ask $6.00
BUY CALL AUG 115.00 RAI-HC open interest= 410 current ask $3.40
BUY CALL AUG 120.00 RAI-HD open interest=2876 current ask $1.60

Picked on June 15 at $111.15
Change since picked: + 0.00
Earnings Date 07/26/06 (unconfirmed)
Average Daily Volume = 632 thousand
 

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