NEW DIRECTIONAL CALL PLAYS

CF Industries - CF - close: 85.93 change: +2.58 stop: 82.40

Why We Like It:
Last week we actually dropped CF as a bullish call candidate because we were tired of waiting for the breakout over resistance near $85.00. Well the breakout finally showed up. Shares soared off their Wednesday lows and by Friday afternoon CF was hitting new highs for the year. I'm suggesting readers buy calls on the breakout. If you're the patient type consider waiting for a dip back toward the $85-84 levels and then buy calls. Our first target to take profits is at $92.50. Our second target is $98.00. FYI: The P&F chart has a quadruple-top bullish breakout buy signal with a $99 target.

FYI: Agrium (AGU) is trying to buy CF but CF keeps rejecting the offer calling it too low. At the same time CF is trying to buy Terra Industries (TRA) and TRA keeps rejecting the offer calling it too low. Eventually one of these companies is going to give up or they're finally going to make a big enough offer or somebody else might step in and start bidding. There is a risk that someone bids too much and the market could think they overpaid, which might push the stock lower. This M&A dance has been going on for months and it will probably continue for months so I'm not expecting it to have much short-term impact on the stock. However, it's worth noting that CF recently filed a lawsuit to force TRA to hold their annual shareholder meeting. This way CF can try and vote some members onto the board of directors.

Suggested Options:
I'm suggesting the October calls. Novembers would probably work just as well. It is always up to the individual trader to decide which month and which strike price best suits your trading style and risk profile.

BUY CALL OCT 85.00 CF-JQ open interest=1414 current ask $5.00
BUY CALL OCT 90.00 CF-JR open interest= 445 current ask $2.65
BUY CALL OCT 95.00 CF-JS open interest= 555 current ask $1.20

Annotated Chart:

Picked on September 05 at $ 85.93
Change since picked:       + 0.00
Earnings Date            10/27/09 (unconfirmed)
Average Daily Volume =        653 thousand 
Listed on September 05, 2009         


Danaher Corp. - DHR - close: 65.76 change: +1.61 stop: 62.25

Why We Like It:
DHR is also breaking out over significant resistance. I would prefer to wait for a dip back into the $64.00-63.00 region but I don't want DHR to get away from us. Let's open small positions now (1/2 our normal size). If DHR does dip back to $63.50 we'll buy another 1/2. Our first target is $69.00. The Point & Figure chart is bullish with a $77 target.

Suggested Options:
I'm suggesting the October calls.

BUY CALL OCT 65.00 DHR-JM open interest=1800 current ask $2.85
BUY CALL OCT 70.00 DHR-JN open interest=1888 current ask .80

Annotated Chart:

Picked on September 05 at $ 65.76 (buy 1/2 position)
Change since picked:       + 0.00
Earnings Date            10/15/09 (unconfirmed)
Average Daily Volume =        2.4 million  
Listed on September 05, 2009         


Factset Research - FDS - close: 56.70 chg: +0.90 stop: 54.35

Why We Like It:
The sideways consolidation in FDS is coiling more tightly and looks ready to breakout past resistance. I'm suggesting a trigger to buy calls on the breakout at $57.55. We'll use a stop under last week's low. Our first target is $62.00. Our second target is $64.75. The point and figure chart is bullish with a $76 target. Please note that FDS is due to report earnings in late September and we'll plan to exit before the company announces.

Suggested Options:
I'm suggesting the October calls but we'll exit ahead of the September earnings report.

BUY CALL OCT 55.00 FDS-JK open interest= 313 current ask $3.60
BUY CALL OCT 60.00 FDS-JL open interest= 343 current ask $1.35

Annotated Chart:

Picked on September xx at $ xx.xx <-- TRIGGER @ 57.55
Change since picked:       + 0.00
Earnings Date            09/22/09 (unconfirmed)
Average Daily Volume =        331 thousand 
Listed on September 05, 2009         


Union Pacific - UNP - close: 62.04 change: +2.01 stop: 59.40

Why We Like It:
The railroads have been showing relative strength. The DJUSRR railroad index has rallied toward its 2009 highs. UNP has followed suit and surged toward its highs for the year. We want to buy the breakout over resistance. I'm suggesting a trigger at $63.00. More aggressive traders may want to jump in early at $62.50. If we are triggered our first target is $69.00. FYI: The P&F chart is currently bullish with an $88 target.

Suggested Options:
I am suggesting the October calls.

BUY CALL OCT 60.00 UNP-JL open interest= 677 current ask $4.00
BUY CALL OCT 65.00 UNP-JM open interest=1835 current ask $1.55
BUY CALL OCT 70.00 UNP-JN open interest= 145 current ask .40

Annotated Chart:

Picked on September xx at $ xx.xx <-- TRIGGER @ 63.00
Change since picked:       + 0.00
Earnings Date            10/22/09 (unconfirmed)
Average Daily Volume =        3.2 million  
Listed on September 05, 2009