NEW DIRECTIONAL CALL PLAYS

Archer Daniels Midland Co. - ADM - close 33.71 change +0.17 stop 30.70

Target(s): 36.50, 37.95, and possibly higher
Key Support/Resistance Areas: 38.00, 34.15, 33.00, 32.00
Current Gain/Loss: Unopened
Time Frame: 2 to 4 weeks
New Positions: Yes, see entry point below

Company Description:
Archer Daniels Midland Company is principally engaged in procuring, transporting, storing, processing, and merchandising agricultural commodities and products. It is a processor of oilseeds, corn, wheat, cocoa, and other agricultural commodities and is a manufacturer of vegetable oil and protein meal, corn sweeteners, flour, biodiesel, ethanol, and other food and feed ingredients. The Company also has a grain elevator and transportation network to procure, store, clean, and transport agricultural commodities, such as oilseeds, corn, wheat, milo, oats, and barley, as well as processed agricultural commodities. The Company's operations are classified into three business segments: Oilseeds Processing, Corn Processing, and Agricultural Services. (source: company press release or website)

Why We Like It:
ADM has been consolidating around a key long term pivot area between $32 and $33 for the past 6 weeks. The stock has lots of support below and limited overhead resistance until $36.50. I suggest readers initiate long positions on a dip or a breakout. We'll use a trigger of $33.05 on a dip and $34.15 on a breakout. Our initial stop will be $30.70 and it will be adjusted once the position is opened.

Note: ADM reports earnings before the market opens on 11/2. The company has beaten earnings estimates in 3 of the past 4 quarters and I am expecting another surprise beat. Holding positions is a higher risk play so please consider using small position size.

Trigger: $33.05 or $34.15 Suggested Position: Buy December $34.00 CALL, current ask $1.16

Annotated 5-year weekly chart:

Entry on October xx
Earnings Date 11/2/2010 before market (unconfirmed)
Average Daily Volume: 5 million
Listed on October 25, 2010