Editor's Note:

Our two new candidates (UTX & WFM) look poised to rebound if the market can keep this bounce alive.

A few stocks that also caught our attention as potential bullish trades this week are: BDX, ADS, and CHKP

- James


NEW DIRECTIONAL CALL PLAYS

United Technologies Corp. - UTX - close: 72.45 change: +2.71

Stop Loss: n/a
Target(s): 76.40, 79.75
Current Option Gain/Loss: Unopened
Time Frame: 2 to 4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
From UTX's July closing high near $91.40 to its closing low this past week of $62.44 the stock saw a correction of almost 29 points. That's a -31.6% decline. You could say UTX is experiencing its own personal bear market (more than -20%). Concerns over an economic slow down and worries over a double-dip recession are the main culprit for the sell-off. I doubt that UTX's business has plunged -30% in a month. I am arguing the correction to the downside is over done and UTX is poised for a larger oversold bounce.

We want to buy calls if both UTX and the S&P500 index both open in positive territory on Monday morning. Nimble traders may want to ignore that entry and hope for a dip back toward $70.00 as your entry point instead. We'll set our first profit target at $76.40. Our final target is $79.75. More aggressive traders could aim for the 200-dma above $80.

I am suggesting September calls. However, we will list August calls but these expire in five days. Only aggressive traders will want to trade August.

We want to keep our position size small since I'm not listing a stop loss.

Just for kicks I'm posting a Point & Figure chart of UTX. You can see how the sell-off paused near its up trend line of what's supposed to be "support".

buy calls if both UTX and S&P500 are positive on Monday morning.

- Suggested Positions -

buy the SEP $75 call (UTX1117I75) current ask $1.85

- or high-risk trade with August calls -

buy the AUG $75 call (UTX1120H75) current ask $0.50

Annotated Chart:

Point & Figure Chart:

Entry on August xx at $ xx.xx
Earnings Date 10/20/11 (unconfirmed)
Average Daily Volume = 6.6 million
Listed on August 13, 2011


Whole Foods Market, Inc. - WFM - close: 58.29 change: +0.85

Stop Loss: n/a
Target(s): 63.50
Current Option Gain/Loss: Unopened
Time Frame: 2 to 4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
WFM came close to a -20% correction in just six trading days. Yet traders bought the dip near its June lows and the top of the gap from February. The fact that this support level held during the market plunge is encouraging and the oversold bounce has already lifted WFM back above its 200-dma. Now the $60.00 level could be overhead resistance. Plus the 50-dma and 100-dma could also be resistance. Yet if the market rebounds I would not be surprised to see WFM retest its highs or at least come close.

I am suggesting call positions now but only if WFM and the S&P500 both open positive on Monday morning. Nimble traders could try and buy an intraday dip near $56.00 if we see one instead. We'll set our first upside target at $63.50.

We want to keep our position size small since we're not listing a stop loss.

If both WFM and the S&P500 open positive on Monday, buy calls.

- Suggested Positions -

buy the SEP $60 call (WFM1117I60) current ask $2.38

Annotated Chart:

Entry on August xx at $ xx.xx
Earnings Date 11/03/11 (unconfirmed)
Average Daily Volume = 2.3 million
Listed on August 13, 2011