NEW DIRECTIONAL CALL PLAYS

Becton Dickinson & Co. - BDX - close 73.78 change +0.52 stop 72.20

Company Description:
Becton, Dickinson and Company (BD) is a medical technology company engaged principally in the development, manufacture and sale of a range of medical supplies, devices, instrument systems and reagents used by healthcare institutions, life science researchers, clinical laboratories, the pharmaceutical industry and the general public. BD’s operations consist of three business segments: BD Medical, BD Diagnostics and BD Biosciences. On November 19, 2009, BD acquired 100% of HandyLab, Inc. (HandyLab), a company that develops and manufactures molecular diagnostic assays and automation platforms. (source: company press release or website)

Target(s): 77.50
Key Support Areas: 74.00, 72.50
Key Resistance Areas: 75.65, 76.70
Time Frame: Several weeks

Why We Like It:
BDX got some publicity after hours today as news came out that Berkshire Hathaway initiated a large stake in the company last quarter. I like the stock at these levels and believe it will trade up to the $77.50 area which is our target and near the 50-day SMA. BDX's prices have been coiling and it is sitting near an upward trend line that started on 5/5/09. The stock has a ways to go to get up to the downtrend line which sits near $79.00. I also believe this is a good defensive play that will do well if there is a relief rally in the broader market or a sideways consolidation. The stock is near a key pivot level at $74.00 dating back to early 2008 which should act as support if BDX can push up through it. I suggest readers initiate long positions at no more than $74.25. BDX traded at $75.00 in the after market so be patient and wait for the pullback near $74.00. Our stop is $79.20 and our time frame is several weeks.

Suggested Position: JUNE $75.00 CALL if BDX trades down near $74.25, current ask $1.45.

Annotated chart:

Entry on May xx at $xx
Earnings Date More than 2 months (unconfirmed)
Average Daily Volume: 1.6 million
Listed on May 17, 2010


Steel Dynamics - STLD - close 14.86 change -0.38 stop 14.15

Company Description:
Steel Dynamics, Inc. is a steel producer and metals recycler. The primary sources of its revenues are from the manufacture and sale of steel products; processing and sale of recycled ferrous and nonferrous metals, and to a lesser degree, fabrication and sale of steel joist and decking products. The Company operates in three segments: steel operations, metals recycling and ferrous resources operations, and steel fabrication operations. (source: company press release or website)

Target(s): 16.25, 16.80
Key Support Areas: 14.50, 14.25
Key Resistance Areas: 15.50, 15.85
Time Frame: About 2 weeks

Why We Like It:
STLD has been trading in a sideways channel between $14.50 and $18.00 for the past 9 months and finds itself at the bottom of the channel (see dashed lines on chart). There have been times when the stock has peaked it head above and below the channel but these are key pivot levels that have been fairly reliable. In addition, the $14.50 price level is converging with an upward trend line that started on 7/8/2009 and we have a good reference point to place a stop just below these levels. I am looking for a relief bounce in this stock and the overall market and I suggest readers initiate call positions at current levels. Our first target is $16.25 which is about +9% higher than current levels. Our time frame is about 2 weeks. I also like the 2:1 risk reward ratio of this trade: we are risking about 70 cents to make $1.40.

Suggested Position: JUNE $15.00 CALL, current ask $0.95.

Annotated chart:

Entry on May xx at $xx
Earnings Date More than 2 months (unconfirmed)
Average Daily Volume: 6.7 million
Listed on May 17, 2010