Editor's Note:

In addition to tonight's new candidates, these stocks caught my eye as potential bullish trades: ESL, TSCO, NEOG and SOHU. One warning, SOHU reports earnings on August 1st.

- James


NEW DIRECTIONAL CALL PLAYS

Noble Energy, Inc. - NBL - close: 99.68 change: +0.67

Stop Loss: 94.25
Target(s): 104.50, 109.00
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
This is a relative strength trade. NBL has been outperforming the market the last couple of days with above average gains and above average volume on those gains. If the market had not been in such a sour mood on Friday then NBL probably would have closed over round-number resistance at $100. Cautious traders may want to wait but I am suggesting we go ahead and buy calls now but only if shares of NBL and the S&P 500 open in positive territory on Monday. If there is a debt ceiling deal come Monday morning the market and NBL may actually gap open higher.

If our trade is opened we'll set our stop at $94.25, which is just under Thursday's low. That's a little wide so more conservative traders may want to use a higher stop loss. NBL has all-time highs near $105. I'm setting our first target to take profits at $104.50. Our secondary, more aggressive target is $109.00. FYI: The Point & Figure chart for NBL is bullish with a $111 target.

NOTE: August options expire in three weeks.

buy calls if NBL & S&P500 open positive on Monday

- Suggested Positions -

buy the AUG $105 call (NBL1120H105) current ask $1.00

- or -

buy the SEP $105 call (NBL1117I105) current ask $2.25

Annotated Chart:

Entry on August xx at $ xx.xx
Earnings Date 10/27/11 (unconfirmed)
Average Daily Volume = 1.3 million
Listed on July 30, 2011


Quality Systems, Inc. - QSII - close: 91.36 change: +1.49

Stop Loss: 87.40
Target(s): 99.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
QSII is another relative strength trade. The stock has been in rally mode the last couple of days thanks to a better than expected earnings report and some bullish analyst comments. Volume has surged on the rally as well, which is a good sign. Shares are still trading under resistance near $92.00 but I am suggesting we go ahead and buy calls now with the condition that we only launch positions if both QSII and the S&P 500 are both positive at the open on Monday morning. Obviously if there is a debt ceiling deal before the market opens then both the market and QSII will probably gap open higher.

If QSII can rally past resistance at $92.00 there is a very good chance the stock will see a short squeeze. Traders will be interested to note that the most recent data listed short interest at 22.5% of the very small 19.4 million-share float.

If triggered I'm suggesting a target at $99.50. More aggressive trades may want to aim higher. FYI: The Point & Figure chart for QSII is bullish with a $123 target.

NOTE: August options expire in three weeks.

buy calls if QSII & the S&P 500 are positive on Monday morning

- Suggested Positions -

buy the AUG $95 call (QSII1120H95) current ask $1.25

- or -

buy the SEP $95 call (QSII1117I95) current ask $2.35

Annotated Chart:

Entry on August xx at $ xx.xx
Earnings Date 10/31/11 (unconfirmed)
Average Daily Volume = 235 thousand
Listed on July 30, 2011