Editor's Note:

In addition to tonight's new candidates, here are a few stocks that caught my eye:

TSCO is showing relative strength. Friday's breakout past the 50-dma looks like it could be a bullish entry point.

SHLD is trading near its lows for the year. A breakdown under $52.00 could be used as an entry point to buy puts.

BDX has fallen toward support in the $76-75 area. Readers could use a breakdown under $75.00 as a trigger to buy puts and target a move toward $70.

JLL has broken down under key support near $60.00. Shares look like a put candidate right here. Consider targets near $55 or $50.

- James


NEW DIRECTIONAL CALL PLAYS

SPDR S&P500 ETF - SPY - close: 115.92 change: -3.12

Stop Loss: 109.90
Target(s): 119.00, 122.00
Current Option Gain/Loss: Unopened
Time Frame: 4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
The stock market looks like it will retest its August lows. We suspect the market will bounce again but that's assuming Greece doesn't default next week. I will point out that technically it looks like the S&P 500 index (and the SPY) has formed a bearish head-and-shoulders pattern over the last three weeks. If the SPY breaks down under the neckline it would forecast a target toward $107.

This trade tonight is a bet that investors are willing to buy the dip near the August lows (ignoring the H&S pattern) instead of selling stocks toward the August 2010 lows. We are suggesting readers use a trigger to buy calls on the SPY at $112.50 (just above the 1120 lows on the S&P500 index). More conservative traders could wait for a dip closer to the 1100 level on the index, which is $111.00 on the SPY.

If we are triggered at $112.50 on the SPY we'll use a stop loss at $109.90. Our upside targets are $119.00 and $122.00.

Buy-The-Dip Trigger @ $112.50

- Suggested Positions -

buy the OCT $118 call (SPY1122J118)

Annotated Chart:

Entry on September xx at $ xx.xx
Earnings Date --/--/--
Average Daily Volume = 293 million
Listed on September 10, 2011


NEW DIRECTIONAL PUT PLAYS

Credit Suisse Group - CS - close: 22.86 change: -1.49

Stop Loss: n/a
Target(s): 19.00, 16.00
Current Option Gain/Loss: Unopened
Time Frame: 4 to 10 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
Based in Zurich, Switzerland, CS is a large European bank. Odds are that if Greece defaults then shares of CS will be swept up (or down) in the turmoil afterwards. To make matters even worse CS is one of 17 banks that the FHFA just named in a lawsuit a week ago regarding misrepresentation of mortgage backed securities.

You could certainly argue that the drop from $46 to $23 in the last four months has already priced in a Greek default. I suspect that CS will drop toward the 2009 lows near $19.00 or possibly breakdown even further.

The credit markets are telling investors that a Greek default is almost guaranteed but no one knows the actual date. It could be this month or it could be six months from now. Therefore, we need to label this CS put play as a speculative, aggressive bet. Greece and the EU do not want the country to default so CS could see a lot of volatility with sharp rebounds on positive headlines but these will be temporary.

With so much potential for volatility I am not listing a stop loss on this trade. Limit your risk by using small positions. I am suggesting we open small bearish put positions now. If we see CS bounce back and fail near its 10-dma or the $25-26 area then we might double down and add more to our put positions.

*Small Positions*

- Suggested Positions -

buy the DEC $20 PUT (CS1117X20) current ask $2.00

Annotated Chart:

Entry on September 12 at $xx.xx
Earnings Date --/--/-- (unconfirmed)
Average Daily Volume = 2.3 million
Listed on September 10, 2011


Stanley Black & Decker - SWK - close: 54.91 change: -2.29

Stop Loss: 58.05
Target(s): 50.25, 46.00
Current Option Gain/Loss: + 0.0%
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
The chart is looking pretty ugly for SWK. Shares just broke down from their $63-56 trading range. I'm not sure what the story is that is producing this relative weakness. It seems like the company's recent acquisition of Niscayah, a Swedish electronic security services company, will be good for SWK's bottom line. Yet investors have pushed SWK to new 2011 lows.

I am suggesting we open bearish put positions now. We'll start with a stop loss at $58.05. Aggressive traders could put their stop above the Wednesday high. Conservative traders could use a stop closer to $56.50ish instead. Our first target is $50.25. The $50-49 area might be support. Yet I'm setting a secondary target at $46.00.

FYI: SWK just produced a new quadruple bottom breakdown sell signal on its Point & Figure chart, which currently points to a $46 target.

Buy Puts Now

- Suggested Positions -

buy the OCT $50 put (SWK1122V50) current ask $2.00

- or -

buy the OCT $55 put (SWK1122V55) current ask $3.80

Annotated Chart:

Entry on September 12 at $ xx.xx
Earnings Date 10/18/11 (unconfirmed)
Average Daily Volume = 1.8 million
Listed on September 10, 2011