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NEW DIRECTIONAL CALL PLAYS

Caterpillar - CAT - close: 43.80 change: +1.59 stop: 39.95

Why We Like It:
CAT gapped higher several days ago when investors got excited about the Obama-infrastructure "trade" and starting buying anything related to construction. Shares of CAT have since consolidated sideways but managed to find support at the $40.00 mark. Today's rally in CAT looks like a new bullish entry point as I suspect the stock is poised for a run toward the $50.00 region. The Point & Figure chart is bullish with a $58 target.

We are suggesting positions now or on a dip back toward $42.00. Our target is $49.50.

Suggested Options:
We are suggesting the January calls.

BUY CALL JAN 45.00 CAT-AI open interest=15194 current ask $2.36
BUY CALL JAN 47.50 CAT-AW open interest= 4081 current ask $1.40
BUY CALL JAN 50.00 CAT-AJ open interest= 6300 current ask $0.77

Annotated Chart:
CAT

Picked on December 16 at $ 43.80
Change since picked:      + 0.00
Earnings Date           01/29/09 (unconfirmed)
Average Daily Volume =      13.4 million  


Perini Corp. - PCR - close: 22.36 change: +2.08 stop: 19.95

Why We Like It:
PCR is another play on the coming infrastructure expansion expected from the Obama administration. The stock just bounced from the bottom of its narrow, bullish channel. We are suggesting readers buy calls on this bounce. We have two targets. Our first target is $24.90. Our second target is $27.00. PCR could be a short squeeze candidate. The most recent data listed short interest at more than 11% of the small 27.7 million-share float. The P&F chart is bullish with a $36 target.

Suggested Options:
We are suggesting the January calls.

BUY CALL JAN 22.50 PCR-AX open interest= 187 current ask $2.55
BUY CALL JAN 25.00 PCR-AE open interest= 560 current ask $1.55

Annotated Chart:
PCR

Picked on December 16 at $ 22.36
Change since picked:      + 0.00
Earnings Date           02/26/09 (unconfirmed)
Average Daily Volume =       1.0 million  


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