Editor's Note:

The market's recovery off today's intraday low is bullish but I think it's only short-term bullish. Stocks look poised for an oversold bounce but I don't think the rebound goes very far. Thus I'm reluctant to add new positions either bullish or bearish. I am adding one new play but if you do choose to jump in use small positions to limit risk.

Wednesday could see a lot of volatility. The ADP employment report will be a precursor to Friday's jobs report. Plus the FOMC will conclude their two-day meeting. Their announcement on interest rates and their comments on the economy should be released around 2:15 p.m.


NEW DIRECTIONAL CALL PLAYS

Parker Hannifin - PH - close: 55.25 change: +1.66 stop: 52.39

Why We Like It:
PH appears to have found a new short-term bottom near $52.50 and its 50-dma. Today's close over $55.00 is a new bullish entry point but we're going to keep stops tight just under yesterday's low. Our first target is $58.50. We will cautiously set a second target at $62.00 but the $60.00 level could prove to be strong resistance. I would use small positions. The rest of this week could be very volatile due to economic data. Plus, PH is due to present at an industry conference tomorrow morning.

Suggested Options:
I'm suggesting the November calls. This should be a short-term trade. My preference is for the $55 strike.

BUY CALL NOV 55.00 PH-KK open interest=1482 current ask $1.70

Annotated Chart:

Picked on  November 03 at $ 55.25
Change since picked:       + 0.00
Earnings Date            01/20/09 (unconfirmed)
Average Daily Volume =        1.6 million  
Listed on  November 03, 2009