The market trend is up but I'm concerned the rally could run out of gas in the next week or two. We need to find short-term bullish plays until the market actually turns.
A few stocks currently on my watch list are: CVX, HSIC, SNDK, NFLX, ISRG.
NEW DIRECTIONAL CALL PLAYS
Wynn Resorts Ltd. - WYNN - close: 118.82 change: +2.10
Stop Loss: 116.95
Target(s): 124.75, 128.00
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see trigger
Why We Like It:
The market could be nearing a top soon and yet the trend remains higher. It's probably too early to look for put plays (generally speaking) and yet I hesitate to add new bullish plays that will take two or more weeks to be worthwhile. We need a bullish candidate that when it moves it can really move and we don't have to be "in" the play very long.
WYNN should fit the bill. The stock exploded higher in early January. Shares have since been consolidating sideways under resistance near $120. If WYNN can breakout past $120.00 the stock could easily shoot toward $125 or $130. I am suggesting we use a trigger to buy small bullish positions at $120.25. If triggered we'll use a stop loss at $116.95. Our first target is $124.75.
Trigger @ $120.25 (Very Small Positions)
- Suggested Positions -
Buy the 2011 February $125.00 calls (WYNN1119B125) current ask $2.56
Entry on January xxth at $ xx.xx
Earnings Date 02/24/11 (unconfirmed)
Average Daily Volume = 2.0 million
Listed on January 15th, 2010