Editor's Note:

Traders should be cautious when it comes to launching new positions. The market's two-week bounce could just be an exaggerated oversold bounce that soon rolls over again. Economic data was generally positive last week but it's still marked by the occasional disappointment. U.S. markets could be heavily influenced by what happens in China and Europe. The Chinese Shanghai will open after a weeklong holiday and many expect it will fall in reaction to the new rules for bank reserve requirements. Meanwhile Greece is going to try and auction off five billion euros worth of ten-year bonds in the near future (date unknown). If that bond auction fails the EU-implosion worry is back on the table. There seem to be a lot of potential land mines that can derail this rebound in stocks but then bulls usually need a wall of worry to climb.

A few additional stocks I would keep my eye on as potential candidates are: BA, COST, GD, MICC, and RIMM.



NEW DIRECTIONAL CALL PLAYS

Celgene Corp. - CELG - close: 60.04 change: +0.15 stop: 54.75

Why We Like It:
Biotechnology stocks have been some of the markets best performers, just look at the BTK biotech index. Helping fuel that move is strength in shares of CELG. This stock has been consolidating sideways under resistance in the $59-60 zone for months. It looks like shares are finally starting to breakout. More aggressive traders may want to go ahead and buy calls now with Friday's close over $60.00. I feel that the major indices and CELG look a little bit overbought and need to dip first before moving higher. Therefore I'm suggesting we buy calls at $58.00 with a stop loss at $54.75.

If triggered at $58.00 our first target is $64.50. Our second, longer-term multi-week target is $69.00.

Suggested Options:

BUY CALL MAR 60.00 (DXQ1020C60) open interest=2910 current ask $1.80
-or-
BUY CALL APR 60.00 (DXQ1017D60) open interest=3058 current ask $2.70

Annotated Chart:

Entry  on  February xx at $ xx.xx <-- TRIGGER @ 58.00
Change since picked:       + 0.00
Earnings Date            04/29/10 (unconfirmed)
Average Daily Volume =        3.6 million  
Listed on  February 20, 2010         


Colgate Palmolive - CL - close: 81.75 change: -0.69 stop: 78.85

Why We Like It:
Shares of this personal products giant are breaking out! Even in a bad economy consumers are still buying toothpaste, shampoo, and hand soaps. Shares of CL were consolidating sideways in the $78.00-82.00 zone for about six weeks until the stock broke out on Thursday. Short-term technicals are turning positive again. I think CL can challenge its highs. I'm suggesting bullish positions now. More conservative traders may want to wait for CL to trade above $82.75 before initiating positions. Our target to exit is $86.00.

Suggested Options:
CL does not normally move that fast. I am suggesting May options instead of March (I don't see any Aprils available yet).

BUY CALL MAY 85.00 (CL1022E85) open interest=3838rrent ask $1.90

Annotated Chart:

Entry  on  February 20 at $ 81.75 
Change since picked:       + 0.00
Earnings Date            04/29/10 (unconfirmed)
Average Daily Volume =        2.8 million  
Listed on  February 20, 2010         


TEVA Pharmaceuticals - TEVA - close: 58.74 change: +1.55 stop: 56.40

Why We Like It:
Based in Israel, TEVA produces both generic and brand name drugs. The stock never broke its bullish trend and traders are back to buying the dips. There is short-term resistance at $59.00 so launching positions now is somewhat aggressive. More conservative traders may want to wait for a new relative high or a move over $60.00 before initiating positions. I'm suggesting a stop loss under the 50-dma. Our first target is $64.00.

Suggested Options:
Keep positions small to limit risk. I'm suggesting the March $60s. Just because they "look" cheap don't go overboard.

BUY CALL MAR 60.00 (TVQ1020C60) open interest=9211 current ask $0.70

Annotated Chart:

Entry  on  February 20 at $ 58.74 
Change since picked:       + 0.00
Earnings Date            05/05/10 (unconfirmed)
Average Daily Volume =        5.1 million  
Listed on  February 20, 2010