NEW DIRECTIONAL PUT PLAYS

FASTENAL Co. - FAST - close: 47.82 change: -1.82 stop: 50.40

Company Description:
Fastenal sells different types of industrial and construction supplies in the following product categories: threaded fasteners and miscellaneous supplies; tools; metal cutting tool blades and abrasives; fluid transfer components and accessories for hydraulic and pneumatic power; material handling; storage and packaging products; janitorial, chemical and paint products; electrical supplies; welding supplies; safety supplies; and metals, alloys and materials. (source: company press release or website)

Target(s): 41.00,
Key Support/Resistance Areas: 50.00, 48-47, 200-dma, 40.00
Time Frame: 3 to 4 weeks

Why We Like It:
Investors are growing more and more worried that the U.S. economy is slowing down too fast. A weaker economy or a double-dip would be bad news for a company that sells construction supplies. Even though FAST blew away the earnings estimates back in July the stock has continued to build on a pattern of lower highs. Shares are now testing support near $48-47 and will soon test the simple 200-dma near $46.75.

More aggressive traders may want to consider new bearish positions now. I am suggesting we use a trigger at $46.50. We'll start the play with a stop loss at $50.40. Our target is $41.00.

Suggested Position: Buy the September $45 puts (current ask $0.75)

- or -

Buy the November $45 puts (current ask $2.15)

Annotated Chart:

Entry on August xxth at $ xx.xx
Earnings Date 10/12/10
Average Daily Volume = 839 thousand
Listed on August 19, 2010


NUCOR Corp. - NUE - close: 38.54 change: -0.80 stop: 40.55

Company Description:
Nucor and affiliates are manufacturers of steel products, with operating facilities primarily in the U.S. and Canada. Products produced include: carbon and alloy steel -- in bars, beams, sheet and plate; steel joists and joist girders; steel deck; fabricated concrete reinforcing steel; cold finished steel; steel fasteners; metal building systems; light gauge steel framing; steel grating and expanded metal; and wire and wire mesh. Nucor, through The David J. Joseph Company, also brokers ferrous and nonferrous metals, pig iron and HBI/DRI; supplies ferro-alloys; and processes ferrous and nonferrous scrap. Nucor is North America's largest recycler (source: company press release or website)

Target(s): 35.25, 31.90
Key Support/Resistance Areas: 43.00, 40.30, 37.00, 35.00
Time Frame: 4 to 6 weeks

Why We Like It:
After nearly a year of trading sideways in the $39-50 zone NUE has finally broken down. The oversold bounce has stalled near the $40 level and its descending 50-dma. The action today looks like another failed rally under resistance. I am suggesting we take advantage of this weakness with new put positions.

We'll start with a stop loss at $40.55. More aggressive traders may want to use a stop just over $41.00. Our first target is $35.25. Our longer-term target is $31.00 but honestly we may not be in the play that long. FYI: The Point & Figure chart is bearish and is forecasting a $26 target.

Suggested Position: Open positions now at current levels.

Buy the October $35.00 puts (NUE1016V35) current ask $0.90

Annotated Chart:

Entry on August 20th at $ xx.xx
Earnings Date 10/21/10
Average Daily Volume = 2.9 million
Listed on August 19, 2010