Hewlett Packard Co - HPQ - close 46.79 change -0.73 stop 44.90

Company Description:
Hewlett-Packard Company is a global provider of products, technologies, software, solutions and services to individual consumers, small- and medium-sized businesses (SMBs) and large enterprises, including customers in the government, health and education sectors. The Company’s offerings span multi-vendor customer services, including infrastructure technology and business process outsourcing, technology support and maintenance, application development and support services, and consulting and integration services; enterprise information technology infrastructure, including enterprise storage and server technology, networking products and resources, and software that optimizes business technology investments; personal computing and other access devices, and imaging and printing-related products and services. In April 2010, the Company completed its acquisition of 3Com Corporation. (source: company press release or website)

Target(s): 49.70
Key Support Areas: 46.50, 45.50
Key Resistance Areas: 48.25, 50.00
Time Frame: Several weeks

Why We Like It:
HPQ reported earnings after the bell that beat estimates and the company raised its guidance for the remainder of the year to $4.45 to $4.50 per share. This means that HPQ is now trading at less than 11 times forward earnings. The stock also has support at $46.50 and $45.50 which gives us a good reference to place a stop to limit risk. There is no doubt HPQ's chart looks terrible but most stock charts do, and I'm viewing the pullback as opportunity to enter a quality name that may catch a bid as investors flee from more speculative names. Shares are higher in the after hours but futures are weak. I'm eyeing two areas as a potential entry: $47.10 or $46.10 depending on price action on Wednesday. Our time frame is a couple of weeks and our stop $44.90 which is below the low on October 2, 2009.

Suggested Position: JUNE $47.50 CALL if HPQ trades down near $47.00 or $46.00, current ask $1.54.

Annotated chart:

Entry on May xx
Earnings Date More than 2 months (unconfirmed)
Average Daily Volume: 16 million
Listed on May 18, 2010