NEW DIRECTIONAL CALL PLAYS

General Dynamics - GD - close: 70.66 change: +1.65 stop: 67.45

Why We Like It:
GD has been on our watch list for days. The stock has finally broken out past key resistance at the $70.00 level and did so on above average volume. The sector is also breaking out to new 2009 highs. I am suggesting readers open bullish positions but we want open just half a position. If the stock pulls back to retest old resistance as new support near $69.00 then we'll consider adding the second half for a full-sized bullish trade (a "full-sized" or normal-sized trade is determined by you, the size of your trading account, and how much risk you want to take).

Our first target to take profits in GD is $74.95. FYI: The Point & Figure chart is bullish with a $105 target.

Suggested Options:
January options would work well but I'm suggesting the February $75 calls.

BUY CALL FEB 75.00 GD-BO open interest=1487 current ask $1.10

Annotated Chart:

Entry  on  December 14 at $ 70.66 (half position)
Change since picked:       + 0.00
Earnings Date            01/27/10 (unconfirmed)
Average Daily Volume =        1.6 million  
Listed on  December 14, 2009         


Weyerhaeuser - WY - close: 42.51 change: +0.47 stop: 40.75

Why We Like It:
Shares of WY have spent the last several days digesting its early December breakout to new highs. Now the stock is bouncing from short-term support at the rising 10-dma. We can use this as a new entry point to buy calls with a relatively tight stop loss. I would open small bullish positions now. Our first target is $44.95. Our second target is $49.00.

Suggested Options:
I'm suggesting the January calls. My preference is the $43 strike.

BUY CALL JAN 43.00 WY-AX open interest=2399 current ask $1.60

Annotated Chart:

Entry  on  December 14 at $ 42.51 
Change since picked:       + 0.00
Earnings Date            02/05/10 (unconfirmed)
Average Daily Volume =        1.6 million  
Listed on  December 14, 2009