NEW DIRECTIONAL CALL PLAYS

Qualcomm Inc - QCOM - close 35.56 change +0.00 stop 33.45

Company Description:
QUALCOMM Incorporated designs, manufactures and markets digital wireless telecommunications products and services based on its code division multiple access (CDMA) technology and other technologies. The Company operates through four segments: Qualcomm CDMA Technologies (QCT); Qualcomm Technology Licensing (QTL); Qualcomm Wireless & Internet (QWI), and Qualcomm Strategic Initiatives (QSI). QCT is a developer and supplier of CDMA-based integrated circuits and system software for wireless voice and data communications, multimedia functions and global positioning system products. QTL grants licenses to use portions of its intellectual property portfolio, which includes certain rights essential to and/or useful in the manufacture and sale of certain wireless products. QWI generates revenues primarily through mobile information products and services, software and software development. QSI makes investments to promote the worldwide adoption of CDMA products and services.

Target(s): 14.35, 14.75
Key Support/Resistance Areas: 37.00, 36.25, 34.50
Time Frame: 1 to 2 weeks

Why We Like It:
QCOM has been taken out to the woodshed this year after a couple of earnings reports that investors didn't like. It wasn't that they missed earnings estimates, rather the company's guidance was lower than previously released estimates. As a result, investors ran for the exits but I believe it is time to take advantage of the value this company has to offer. Their technology is right smack in the middle of a fast growing smart phone industry and from everything I have read the supply chain remains robust which bodes well for QCOM. The company earns almost $2.00 per share and trades around 18 times trailing twelve months earnings which is cheap for a growth company. Technically, QCOM has long term support near $35.25 dating back to 2007. The stock also appears to be breaking out of its recent downward trend line and has formed both a long term and short term bullish wedge pattern. I suggest readers initiate long positions at current levels. Our initial stop will be $33.45 which will give QCOM some room to work.

Suggested Position: July $36.00 CALL, current ask $1.42

Annotated Chart:

Entry on May xx
Earnings Date 7/21/2010 (unconfirmed)
Average Daily Volume: 26 million
Listed on 5/29/10


Trina Solar - TSL - close 17.50 change -0.50 stop 16.45

Company Description:
Trina Solar Limited (Trina) is an integrated solar-power products manufacturer based in China with a global distribution network covering Europe, North America and Asia. It produces standard monocrystalline photovoltaic (PV) modules ranging from 165 watts (W), to 240 W in power output and multicrystalline PV modules ranging from 215 W to 240 W in power output. Trina sells and markets its products worldwide, including in a number of European countries. It sells the products to distributors, wholesalers, power plant developers and operators and PV system integrators, including Bull Solar, Enfinity NV, Gestamp Asetym Solar S.L., Invictus NV and Proysectos Integrales Solares S.L. As of December 31, 2009, Trina had an annual manufacturing capacity of ingots and wafers of approximately 500 MW and cells and modules of approximately 600 MW.

Target(s): 18.40, 19.00, 19.95, 20.80
Key Support/Resistance Areas: 16.55, 17.25, 18.50, 19.00, 20.00, 21.00
Time Frame: 1 to 2 weeks

Why We Like It:
The selling in TSL appears to be overdone when compared to its counterparts in the solar industry. And with all of the news about the oil spill and focus on green technology I expect solar stocks to rebound from these levels, including TSL. TSL is breaking out of a steep downward trend line and I believe the stock is poised to bounce higher and even possibly test its 200-day SMA which is all the way up near $21.00. But we don't even need that big of a bounce to book a profitable trade and I suggest readers take advantage of the building momentum by initiating long positions at current levels. We'll use an initial stop at $16.45.

Suggested Position: July $18.00 CALL, current ask $1.75

Annotated Chart:

Entry on May xx
Earnings Date 7/21/2010 (unconfirmed)
Average Daily Volume: 5.4 million
Listed on 5/29/10


NEW DIRECTIONAL PUT PLAYS

Smith International, Inc - SII - close 37.56 change -2.61 stop 42.05

Company Description:
Smith International, Inc. (Smith) is a provider of products and services used during the drilling, completion and production phases of oil and natural gas exploration and development activities. The Company operates in three business segments: M-I SWACO, Smith Oilfield and Distribution. In addition the Company also provides a range of technologically-advanced products and engineering services, including drilling and completion fluid systems, solids-control and separation equipment, waste-management services, three-cone and diamond drill bits, borehole enlargement services, tubulars, directional systems, measurement-while-drilling and logging-while-drilling services, coiled tubing, cased-hole wireline and other downhole tools and services. The Company also offers supply-chain management solutions through an extensive North American branch network providing pipe, valves and fittings as well as mill, safety and other maintenance products.

Target(s): $34.55, 32.15
Key Support Areas: 42.00, 40.90, 39.00, 37.00, 34.00
Key Resistance Areas: 59.50, 60.50
Time Frame: 1 to 2 weeks

Comments:
SII looks vulnerable and is on the verge of possibly filling a gap all the way down to the $34.00 area. The oil services sector has been beaten down recently and SII has not been spared. SII remains below its downtrend line and if it trades below $36.95 there is a lot of air underneath. I'm looking for SII to fill this gap and I suggest readers initiate short positions if the stock trades up near $38.95 or down to $36.90, whichever occurs first. I view this trade as a good candidate to buy options as opposed to simply shorting the stock so that you know how much money is at risk. We are placing a wide initial stop on the trade at $42.05 until we're in and will adjust it accordingly. *NOTE: I view this trade as aggressive so please use proper position size to manage risk.

Suggested Position: Buy July $37.00 PUT (current ask $2.70) if SII trades up near $38.95 or down to $36.90, whichever occurs first.

Annotated chart:

Entry on May xx
Earnings 7/28/10 (unconfirmed)
Average Daily Volume: 7.6 million
Listed on May 29, 2010