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Education Stocks Showing Strength

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Play Editor's Note: I am adding some bullish positions tonight but I do so with a lot of hesitation. I'm worried that this might be a sucker's rally given the extremely low volume. Currently I think the best trade is probably just sitting out and waiting until next week to see what direction the market moves. If you can't wait then consider some aggressive, speculative plays like the ones listed tonight.

FYI: One stock I considered but did not add is Goldman Sachs (GS). The late day spike in GS looks unsustainable but the rally is a bullish breakout over $80.00 and its 50-dma. GS would definitely be a very aggressive, high-risk bullish candidate but there is no denying the bullish triangle pattern. My first target would be $89.90.


NEW DIRECTIONAL CALL PLAYS

Apollo Group - APOL - close: 77.46 change: +1.06 stop: 74.90

Why We Like It:
APOL is one of the most bullish stocks I can find. The stock is trading near multi-month highs and looks poised to breakout. Shares have been consolidating sideways but the consolidation recently narrowed as APOL built on the bullish trend of higher lows. I am suggesting bullish positions now. More conservative traders may want to wait for a rally over $78.00 again.

There is some resistance near $81.50 so we're setting our first target to exit at $81.00. We will tentatively set a secondary target at $84.90 but I'm not very optimistic. The P&F chart is bullish with an $87 target.

Suggested Options:
We are suggesting January calls because this should be a short-term play. APOL has earnings on January 8th and we do not want to hold over the announcement.

Remember, this is an aggressive play and we're using options that expire in less than four weeks.

BUY CALL JAN 75.00 OAQ-AO open interest=5868 current ask $6.70
BUY CALL JAN 80.00 OAQ-AP open interest=6839 current ask $3.90

Annotated Chart:
APOL

Picked on December 30 at $ 77.46
Change since picked:      + 0.00
Earnings Date           01/08/09 (confirmed)
Average Daily Volume =       2.3 million  


Bidu.com - BIDU - close: 126.93 change: +5.08 stop: 119.95

Why We Like It:
This is an aggressive play. BIDU can be a very volatile stock and the market is trading with very light volume. Essentially we are betting that today's bounce from support near $120 (where BIDU filled the gap) will continue. Our short-term target is $139.95. FYI: the P&F chart is bullish with a $212 target.

Suggested Options:
We're suggesting the January calls.

Remember, this is an aggressive play and we're using options that expire in less than four weeks.

BUY CALL JAN 125.0 BDQ-AE open interest= 796 current ask $9.50
BUY CALL JAN 130.0 BDQ-AF open interest=1271 current ask $7.00
BUY CALL JAN 135.0 BDQ-AG open interest= 741 current ask $5.10

Annotated Chart:
BIDU

Picked on December 30 at $126.93
Change since picked:      + 0.00
Earnings Date           02/12/09 (unconfirmed)
Average Daily Volume =       4.2 million  


ITT Educational Serv. - ESI - close: 93.80 chg: +2.35 stop: 89.90

Why We Like It:
I have been watching ESI for days. The stock was slowly marching higher and nearing resistance near $92.00 and its trendline of lower highs. Today's rally is a bullish breakout over both. While I am skeptical of the move due to the market's lack of volume it remains a bullish entry point. Our short-term target is $99.90. I'm considering a secondary target near $105. The P&F chart is bullish with a $111.00 target.

Suggested Options:
We are suggesting the January calls.

Remember, this is an aggressive play and we're using options that expire in less than four weeks.

BUY CALL JAN 90.00 ESI-AR open interest=1854 current ask $6.50
BUY CALL JAN 95.00 ESI-AS open interest= 927 current ask $3.50
BUY CALL JAN 100.0 ESI-AT open interest=2388 current ask $1.65

Annotated Chart:
ESI

Picked on December 30 at $ 93.80
Change since picked:      + 0.00
Earnings Date           01/22/09 (unconfirmed)
Average Daily Volume =       831 thousand 


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