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GD None None
MOS    
POT    

New Calls

General Dynamic - GD - close: 86.10 chg: +1.48 stop: 82.99

Company Description:
General Dynamics, headquartered in Falls Church, Va., employs approximately 83,500 people worldwide and reported 2007 revenues of $27.2 billion. The company has leading market positions in mission critical information systems and technologies, land and amphibious combat systems, shipbuilding and marine systems, and business aviation. (source: company press release or website)

Why We Like It:
GD displayed some impressive relative strength today. I mentioned it as a potential bullish candidate last night in my play editor's note. Today's move is a bullish breakout over resistance at $85.00. The stock did so on above average volume, which is normally a good sign. The move over $86 produced a new Point & Figure chart buy signal with a $95 target. The $85 level has been resistance for weeks so I would expect some follow through. If you don't want to buy GD here then look for a dip near the $85 level again as an entry point. There is some potential resistance at the 100-dma around $86.75. We are setting two targets. Our first, short-term target is the $89.75-90.00 range since the $90 mark would be natural, round-number resistance. Our second target is the $93.00-94.00 zone near its highs. We do not want to hold over the late April earnings report.

Suggested Options:
We are suggesting the April calls.

BUY CALL APR 85.00 GD-DQ open interest=466 current ask $3.40
BUY CALL APR 90.00 GD-DR open interest=500 current ask $1.10

Picked on March 13 at $ 86.10
Change since picked: + 0.00
Earnings Date 04/23/08 (unconfirmed)
Average Daily Volume = 2.1 million

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Mosaic - MOS - close: 108.93 change: +2.82 stop: 99.89

Company Description:
The Mosaic Company is one of the world's leading producers and marketers of concentrated phosphate and potash crop nutrients. (source: company press release or website)

Why We Like It:
Last night I mentioned that we were watching the fertilizer names as potential candidates and almost all of them rally sharply today. History would suggest that buying dips near MOS' rising 50-dma has been a great place to buy the stock. MOS pierced its 50-dma on Monday but bounced back sharply. Now shares are poised to breakout past its three-week trend of lower highs and price resistance near $110. Before we go any further I want to remind readers that this entire group of stocks can be very volatile and stop loss placement and risk control is always a challenge. Just today alone MOS had a $8.50 intraday swing. Options are going to be expensive because of this volatility. Plus, we still have a capitulation event looming over the market. When (if) it occurs MOS will not be immune and will probably be punished worse because it has been such a performer. We have to label this an aggressive, higher-risk play. Here's the plan: We are suggesting readers buy calls on MOS at $111.00. My first concern is just being whipsawed out of it on intraday volatility but at $111 it should be a clear breakout higher. We are listing two targets. Our first target is the $119.50-120.00 zone. Our second target is the $135.00-140.00 zone. Please note that we do not want to hold over the early April (unconfirmed) earnings report.

You may also want to consider bullish plays on CF, POT or TNH if they continue higher. We're watching MON but it seems to be lagging its peers.

Suggested Options:
Our suggested entry point is $111.00. We're suggesting the April calls. Trading note: the symbols below (from the CBOE) are not standard suffixes for $110, 115, and 120 strikes. Confirm with your broker.

BUY CALL APR 110 MOS-DY open interest=1363 current ask $ 9.50
BUY CALL APR 115 MOS-DU open interest=3019 current ask $ 7.50
BUY CALL APR 120 MOS-DZ open interest=3849 current ask $ 5.70

Picked on March xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 04/03/08 (unconfirmed)
Average Daily Volume = 7.0 million

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Potash Corp. - POT - cls: 160.40 chg: +5.61 stop: 149.00

Company Description:
PotashCorp is an integrated producer of fertilizer, industrial and animal feed products. We are the world's largest fertilizer enterprise, producing the three primary plant nutrients: potash, nitrogen and phosphate. (source: company press release or website)

Why We Like It:
POT is another fertilizer name and probably the strongest in the industry. I won't go into fundamentals here but the company is thriving. The world is seeing massive demand for its products. Emerging markets will continue to fuel the boom for years to come. In the past buying dips near the 50-dma has been a good bet. Shares are bouncing from that area now. Today's move is a bullish engulfing candlestick pattern. We want to see some confirmation. We're suggesting readers buy calls on POT at $162.75. More conservative traders may want to wait for a new all-time high over $166.40. Our target is the $178.00-180.00 zone. We will consider adding a second, more aggressive target as the play progresses. We mentioned in the MOS play above that these stocks can be super volatile. POT had close to a $12 range today. That makes risk control and stop loss placement a real challenge. We have to label this an aggressive, higher-risk play.

You may also want to consider bullish plays on CF, MOS or TNH if they continue higher. We're watching MON but it seems to be lagging its peers.

Suggested Options:
Our suggested trigger for POT is $162.75. We are suggesting the April calls.

BUY CALL APR 160 PYP-DL open interest=2328 current ask $11.70
BUY CALL APR 165 PYP-DM open interest=2360 current ask $ 9.30
BUY CALL APR 170 PYP-DN open interest=2152 current ask $ 7.40
BUY CALL APR 175 PYP-DO open interest= 903 current ask $ 5.70

Picked on March xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 04/24/08 (unconfirmed)
Average Daily Volume = 7.5 million
 

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