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New Plays

New Bullish Candidates On the Reversal

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NEW DIRECTIONAL CALL PLAYS

Amgen - AMGN - close: 58.41 change: +0.40 stop: 56.99

Why We Like It:
Biotech giant AMGN looks ready to breakout above resistance and continue its bullish run higher. The stock has been consolidating sideways the last couple of session above a large cloud of moving averages. It's not a coincidence that the rally stalled. Just look at the trendline of lower highs. Monday's high was $58.89. I'm suggesting a trigger to buy AMGN at $59.15. More conservative traders may want to wait for a breakout over the $60.00 level, which has been round-number, psychological resistance in the past. Our target is $64.00.

Suggested Options:
Trigger to buy calls is $59.15. Use the March calls.

BUY CALL MAR 55.00 YAA-CK open interest=8087 current ask $4.70
BUY CALL MAR 60.00 YAA-CL open interest=4011 current ask $1.90
BUY CALL MAR 65.00 YAA-CM open interest=1602 current ask $0.62

Annotated Chart:
AMGN

Picked on February xx at $ xx.xx <-- see TRIGGER
Change since picked:      + 0.00
Earnings Date           04/23/09 (unconfirmed)
Average Daily Volume =       8.3 million  


CNOOC Ltd. - CEO - close: 93.19 change: -0.93 stop: 89.65

Why We Like It:
CEO is part of the large, state-owned China National Offshore Oil Corp. The stock has coiled into the very tight end of a neutral pattern of higher lows (support) and lower highs (resistance). Shares should breakout one way or the other very soon. I am suggesting an aggressive entry now to buy calls on the expectation that CEO will break higher. The alternative would be to wait for a rally over $100. Alternatively if you're bearish look for a new decline under its 100-dma near $87.50.

We're setting two upside targets. Our first target is $99.75. Our second target is $104.85. More aggressive traders could aim for the exponential 200-dma near $110.

Suggested Options:
Use the March calls.

BUY CALL MAR 90.00 CEO-CR open interest= 138 current ask $8.80
BUY CALL MAR 95.00 CEO-CS open interest=  39 current ask $6.00
BUY CALL MAR 100.0 CEO-CT open interest= 677 current ask $3.90

Annotated Chart:
CEO

Picked on February xx at $ xx.xx <-- see TRIGGER
Change since picked:      + 0.00
Earnings Date           03/17/09 (unconfirmed)
Average Daily Volume =       572 thousand 


CME Group - CME - close: 193.06 change: +7.78 stop: 174.95

Why We Like It:
CME is the holding company for both the CME and the CBOT. After an extremely painful 2008 it looks like the stock may have finally bottomed. Shares have a double bottom near $155 and the bounce is finally starting to clear overhead resistance. Today's rally saw a breakout over its 50-dma and resistance near $190. The stock can see big swings so I consider it an aggressive trade. Buy calls on it now with two exit targets. Our first target is $214.85. Our second target is $224.00. Much more aggressive traders could aim for the 100-dma currently near $240.

Suggested Options:
I am suggesting the March calls. You may want to use calls that are farther out.

BUY CALL MAR 190.0 CMJ-CR open interest= 342 current ask $17.50
BUY CALL MAR 200.0 CME-CA open interest= 894 current ask $12.80
BUY CALL MAR 210.0 CME-CJ open interest= 605 current ask $ 8.70

Annotated Chart:
CME

Picked on February 12 at $193.06
Change since picked:      + 0.00
Earnings Date           04/22/09 (unconfirmed)
Average Daily Volume =       1.5 million  


Freeport McMoran - FCX - close: 29.40 change: +1.48 stop: 26.75

Why We Like It:
Earlier this week it looked like the bullish rally in FCX was over. The stock had produced a bearish failed rally under resistance at its descending 100-dma. Now the situation has improved. Traders are buying the dip at FCX's three-week bullish trend of higher lows. I think the stock is poised for a real breakout higher.

While I am suggesting bullish positions now more conservative traders will want to seriously consider waiting for a rally over $30.00 or a new relative high above $31.25 before initiating positions. Our target is $34.85.

Suggested Options:
I am suggesting the March calls.

BUY CALL MAR 25.00 FCX-CE open interest= 5378 current ask $5.70
BUY CALL MAR 30.00 FCX-CF open interest=19985 current ask $2.70
BUY CALL MAR 35.00 FCX-CG open interest=12128 current ask $1.07

Annotated Chart:
FCX

Picked on February 12 at $ 29.40
Change since picked:      + 0.00
Earnings Date           04/23/09 (unconfirmed)
Average Daily Volume =      25.9 million  


FMC Corp. - FMC - close: 48.61 change: +0.12 stop: 45.90

Why We Like It:
FMC's breakout from February 6th has pulled back and now traders are buying the dip. The early February rally was starting to look like a bull trap but this may turn out to be a real bullish opportunity. FMC had been building a bullish consolidation pattern for months and today's afternoon bounce is a chance to jump on. I'm suggesting a stop loss under today's low.

Our target is $54.50. More aggressive traders can aim for the 200-dma.

Suggested Options:
I'm suggesting the March calls. You might want to consider April options, which have more open interest.

BUY CALL MAR 45.00 FMC-CI open interest= 14 current ask $5.80
BUY CALL MAR 50.00 FMC-CJ open interest=461 current ask $2.95
BUY CALL MAR 55.00 FMC-CK open interest= 12 current ask $1.20

Annotated Chart:
FMC

Picked on February 12 at $ 48.61
Change since picked:      + 0.00
Earnings Date           04/23/09 (unconfirmed)
Average Daily Volume =       1.0 million  


Potash - POT - close: 86.09 change: +1.09 stop: 79.95

Why We Like It:
I've had my eye on POT for days ever since shares began testing resistance at $80.00 back in late January. It never seemed to offer a great entry point and then it started to run away from me. This pull back toward previous resistance at $80.00 and its 100-dma looks like a great entry point. Trades were quick to buy the dip and POT rallied from its lows near $81.00 this morning.

I'm suggesting readers buy call options now with a stop loss under $80.00. This is a volatile stock so we're using a wide stop. Readers should consider it a more aggressive trade. Our first target is $92.00. Our second target is $98.00.

Suggested Options:
I'm suggesting the March calls.

BUY CALL MAR 85.00 PYP-CQ open interest=6402 current ask $8.80
BUY CALL MAR 90.00 PYP-CR open interest=6760 current ask $6.40
BUY CALL MAR 95.00 PYP-CS open interest=5304 current ask $4.50

Annotated Chart:
POT

Picked on February 12 at $ 86.09
Change since picked:      + 0.00
Earnings Date           04/23/09 (unconfirmed)
Average Daily Volume =      12.5 million  


Schnitzer Steel - SCHN - close: 42.68 change: +0.46 stop: 39.95

Why We Like It:
SCHN was a relative strength leader in early February with the stock surging to new four-month highs. This past week the stock has been hit with some sharp profit taking but traders are now buying the stock near support at $40.00 and its rising trendline of higher lows. If there is an entry point to jump on this train this looks like our ticket.

I'm suggesting readers buy calls now with a stop loss under $40.00. Our first target is $47.45. I'm going to list a secondary target $51.40 but I strongly suggest readers exit the majority of their position at $47.45. The $50.00 level might be tough resistance to break.

Suggested Options:
Use the March calls.

BUY CALL MAR 40.00 SQQ-CH open interest= 260 current ask $6.00
BUY CALL MAR 45.00 SQQ-CI open interest= 585 current ask $3.40
BUY CALL MAR 50.00 SQQ-CJ open interest= 253 current ask $1.65

Annotated Chart:
SCHN

Picked on February 12 at $ 42.68
Change since picked:      + 0.00
Earnings Date           04/02/09 (unconfirmed)
Average Daily Volume =       796 thousand 


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