Editor's Note:

In addition to tonight's new candidate I would keep an eye on O'Reilly Automotive (ORLY). Consumers are keeping their cars longer and thus paying for more repairs. Shares of ORLY might be a bullish candidate on a dip into the $57-56 area or a breakout past $58.00.

- James


NEW DIRECTIONAL CALL PLAYS

Norfolk Southern - NSC - close: 67.75 change: +1.07

Stop Loss: 64.90
Target(s): 72.00, 74.90
Current Option Gain/Loss: + 0.0%
Time Frame: 4 to 6 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
The Dow Jones Transportation index looks ready to rally and breakout past the 5200 level in spite of high oil prices. The Dow Jones U.S. Railroad index looks even stronger. In just the last few days NSC has broken out past resistance near $66, pulled back, and we're already seeing investors buy the dip.

I am suggesting bullish positions now. We'll use a stop loss at $64.90. More conservative traders might want to consider a stop closer to the $66.00 level instead. The $70.00 level could offer potential resistance but I'm setting our profit targets at $72.00 and $74.90. We do not want to hold past NSC's late April earnings report.

- Open Bullish Positions Now @ current levels

- Suggested Positions -

Buy the April $70 calls (NSC1116D70) current ask $0.50

- or -

Buy the May $70 calls (NSC1121E70) current ask $1.40

Annotated Chart:

Entry on March 25th at $ xx.xx
Earnings Date 04/27/11 (unconfirmed)
Average Daily Volume = 3.0 million
Listed on March 24th, 2011