NEW DIRECTIONAL CALL PLAYS

iShares DJ Financial ETF - IYF - close 55.34 change +1.72 stop 52.40

Target(s): 56.00, 57.40, or higher
Key Support/Resistance Areas: 57.75, 56.15, 54.25, 53.65, 52.50
Current Gain/Loss: Unopened
Time Frame: 2 to 4 weeks
New Positions: Yes, see trigger

Company Description:
iShares Dow Jones U.S. Financial Sector Index Fund (the Fund) seeks investment results that correspond generally to the price and yield performance of the Dow Jones U.S. Financials Index (the Index). The Index measures the performance of the financial sector of the United States equity market, and includes companies in industry groups, such as banks, non-life insurance, life insurance, real estate and general finance. The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. (source: company press release or website)

Why We Like It:
Financials have seen two pieces of good news over the past two days. First, the QE2 program announced yesterday is targeted towards the short to middle end of the yield curve, not the long end as many thought. This should make the yield curve steeper which is likely to enhance bank profits. Second, the WSJ said today that the Fed may be considering removing restrictions from allowing TARP banks to pay dividends. And this is sure to attract investors into financial stocks. More nimble traders may consider launching positions now, however, there could be a dip in the broader market so it can gather energy for another move higher. Technically, IYF broke over long term resistance at $54.30 today. We want to use this area as a trigger to launch bullish positions $54.50. Our initial stop is below the rising 50-day SMA at $52.30. We are targeting a move towards the May highs.

Suggested Position: Buy December $55.00 CALL if IYF trades to $54.50

Annotated chart:

Entry on November XX
Earnings Date N/A (unconfirmed)
Average Daily Volume: 1.0 million
Listed on November 4, 2010