NEW DIRECTIONAL CALL PLAYS

Coach Inc. - COH - close: 35.56 change: +0.56 stop: 33.75

Why We Like It:
Investors are completely ignoring the recent bearish readings on consumer sentiment. The normal thought process suggests that nervous consumers don't spend a lot of money, which would be bad for the retailers. No one is expecting any fireworks for this coming holiday shopping season. Most expectations are for a flat fourth quarter with a few hoping for improvement only because last year's numbers are so bad the comparisons will be easy to beat.

Yet that's not stopping shares of COH from hitting new 2009 highs. This is a pure momentum trade. The recent breakout over resistance at $35.00 is a bullish entry point. I'm suggesting traders keep positions relatively small since we're fighting what should be a bearish consumer spending environment.

Our first target is $38.00. Our second target is $39.85. My time frame is a few weeks. FYI: Traders should note that this week will bring several high-profile earnings reports in the retail sector. That could create volatility for stocks in this industry.

Suggested Options:
I'm suggesting the December calls. My preference is the $35 strike.

BUY CALL DEC 35.00 CKO-LI open interest=2445 current ask $1.95

Annotated Chart:

Picked on  November 14 at $ 35.56
Change since picked:       + 0.00
Earnings Date            01/21/10 (unconfirmed)
Average Daily Volume =        4.9 million  
Listed on  November 14, 2009         


Waters Corp - WAT - close: 60.72 change: +1.24 stop: 58.75

Why We Like It:
WAT is a scientific instrument company with a stock that's closing near its 2009 highs. I'm tempted to buy calls right here. However, with the S&P 500 still under 1100 I want to see a little more strength. I'm suggesting a trigger to buy calls at $61.50. If triggered our first target is $64.90. We'll cautiously set a secondary target at $67.45.

Suggested Options:
If WAT hits our trigger at $61.50 I'm suggesting the December calls. My preference is the $65.00 strike.

BUY CALL DEC 65.00 WAT-LM open interest= 69  current ask $0.55

Annotated Chart:

Picked on  November xx at $ xx.xx <-- TRIGGER @ 61.50
Change since picked:       + 0.00
Earnings Date            01/27/10 (unconfirmed)
Average Daily Volume =        1.2 million  
Listed on  November 12, 2009