Editor's Note:

My market bias is still bearish. However if you are looking for a bullish candidate I suggest you check out the restaurant stocks. CMG, PFCB, and BWLD all have bullish shares and appear to be resisting the market's weakness. CMG and BWLD do have some resistance directly overhead but they might be worth a look on a breakout higher.


NEW DIRECTIONAL PUT PLAYS

General Dynamics - GD - close: 67.64 change: -0.40 stop: 70.55

Why We Like It:
The up trend in the defense sector has been broken. Now we don't know if the trend has actually changed or if this is just a correction but short-term the trend is down. I want to take advantage of the bounce in GD to buy puts. Shares bounced back toward technical resistance at its 50-dma and stalled. We can buy puts now and use a stop above the early February high. There is potential support at $65 and the exponential 200-dma but we want to aim for the simple 200-dma near $61.85. We'll set our actually exit price at $62.60.

Suggested Options:
I'm suggesting the March $65 puts.

BUY PUT MAR 65.00 GD1020O65 open interest=1495 current ask $1.30

Annotated Chart:

Entry  on  February 10 at $ 67.64
Change since picked:       + 0.00
Earnings Date            04/28/10 (unconfirmed)
Average Daily Volume =        2.4 million  
Listed on  February 10, 2010