In addition to the play below I have listed three other stocks on my watch list for potential breakout plays tomorrow if the employment report is favorable. These may or may not make it in the model portfolio but I thought I would mention them for readers interested.
EQR, VTR, BKCC - All are at pivotal levels and could breakout in a strong market. Otherwise, timing entries on a pullback is certainly an option.
NEW DIRECTIONAL CALL PLAYS
Stillwater Mining - SWC - close 14.75 change +0.40 stop 13.95
Stillwater Mining Company is engaged in the development, extraction, processing, refining and marketing of palladium, platinum and associated metals (platinum group metals (PGMs)) from a geological formation in south central Montana known as the J-M Reef and from the recycling of spent catalytic converters. The Company operates a smelter and base metal refinery at Columbus, Montana, which improve the mined concentrates into a PGM-rich filter cake. Besides processing mine concentrates, the Company also recycles spent catalyst material at the smelter and base metal refinery to recover the contained PGMs palladium, platinum and rhodium.
Target(s): 16.30, 16.95, 17.65
Key Support/Resistance Areas: 14.40 to 14.70
Time Frame: 1 to 3 weeks
Why We Like It:
Industrial metals such as silver and palladium that SWC mines are in demand and prices are increasing. SWC has broken out and closed above a key pivot level in the $14.50 area. I suggest readers buy SWC calls the stock trades to $15.05 which is above today's high of $14.98. If the broader market rallies on good a employment report tomorrow SWC should eventually trade up towards its 52 week highs. If the broader market sells off on a bad employment report we may consider entering at a lower price next week. There is a lot of support below. If triggered our initial stop will be $13.95.
Suggested Position: Buy October $15.00 CALL, current ask $1.10
Annotated daily chart:
Entry on September xx
Earnings 11/4/2010 (unconfirmed)
Average Daily Volume: 1.62 million
Listed on September 2, 2010