NEW DIRECTIONAL CALL PLAYS

iShares Transportation ETF - IYT - close: 84.19 change: +2.40

Stop Loss: 81.30
Target(s): 90.00
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
The transportation sector saw a hard reversal higher once traders started buying the dip this morning. The IYT rallied to resistance near $85.00 before trimming gains late in the day. If this ETF can breakout past resistance it could see another explosive move higher.

The high today was $85.07. We are suggesting a trigger to buy calls at $85.20. The 100-dma and exponential 200-dma could be potential resistance but we're aiming for $90.00. Readers will want to keep our position size small since the transports are short-term overbought given the huge bounce from its October lows.

Trigger @ $85.25 (small positions)

- Suggested Positions -

buy the NOV $87 call (IYT1119K87) current ask $1.95

Annotated Chart:

Entry on October xx at $ xx.xx
Earnings Date --/--/--
Average Daily Volume = 662 thousand
Listed on October 18, 2011


PowerShares QQQ ETF - QQQ - close: 57.99 change: +0.71

Stop Loss: 56.45
Target(s): 59.25
Current Option Gain/Loss: +0.0%
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
The NASDAQ and the QQQs are likely to dip at the open tomorrow as investors react to Apple Inc.'s (AAPL) first earnings miss in a long time. Yet we suspect any weakness in the QQQ will be temporary.

I am suggesting investors buy the dip in the QQQ at the open but we'll keep our position size small to limit risk. Nimble traders may want to hold off and try and open positions on a dip near today's low or the simple 200-dma if the Qs drop that far. We're listing a stop loss at $56.45. Aggressive traders will definitely want to consider placing their stop under the 200-dma (currently 56.30). Our exit target is $59.25.

Buy calls at the open (Small Positions)

- Suggested Positions -

buy the NOV $58 call (QQQ1119K58) current ask $2.12

Annotated Chart:

Entry on October 19 at $ xx.xx
Earnings Date --/--/--
Average Daily Volume = 87 million
Listed on October 18, 2011


Semiconductor ETF - SMH - close: 30.50 change: +0.50

Stop Loss: 29.45
Target(s): 33.45
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
Intel (INTC) delivered a bullish earnings report tonight. This should be positive for the semiconductor stocks tomorrow. The SMH struggled with resistance near $30.65 today. I am suggesting we open bullish positions at $30.75. The $32.00 level could be resistance but we're aiming for $33.45. I would keep our position size small. The semiconductor sector is short-term overbought.

Trigger @ $30.75 (small positions)

- Suggested Positions -

buy the NOV $31.50 call (SMH1119K31.5) current ask $0.52

Annotated Chart:

Entry on October xx at $ xx.xx
Earnings Date --/--/--
Average Daily Volume = 12.7 million
Listed on October 18, 2011