NEW DIRECTIONAL CALL PLAYS

Abercrombie & Fitch - ANF - close: 73.00 change: +3.34

Stop Loss: 67.90
Target(s): 77.25
Current Option Gain/Loss: Unopened
Time Frame: 2 to 3 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
Many of the retail names were showing strength today. ANF broke out from a two-week consolidation and resistance near $72.00. Today's move looks like a new entry point for a run at the 52-week highs near $77.50.

I am labeling this as an aggressive trade. ANF can be a volatile stock and we have a wide stop loss. I would launch small bullish positions tomorrow but only if both ANF and the S&P 500 index both open positive. Please note we do not want to hold over the mid November earnings report. Our exit target is $77.25.

FYI: Traders will want to take note of the fact that the most recent data listed short interest at 8% of the 85.8 million share float. Plus, the Point & Figure chart for ANF is bullish with a $98 target.

*See Entry Point Details Above*

- Suggested Positions -

buy the NOV $75 call (ANF1119K75) current ask $2.84

Annotated Chart:

Entry on October xx at $ xx.xx
Earnings Date 11/16/11 (unconfirmed)
Average Daily Volume = 2.1 million
Listed on October 24, 2011


iShares China 25 index ETF - FXI - close: 35.28 change: +1.82

Stop Loss: 32.95
Target(s): 39.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
One of the big (and positive) headlines today was a bullish reading on the early (Flash) PMI data in China. Readings over 50 normally indicate expansion and growth and this reading came in positive last night at 51.1, ending a three-month losing streak. Shares of the FXI gapped open higher and surged to a +5.4% gain and broke through resistance at the 50-dma and the $35.00 level.

Normally, I would avoid chasing a move this big but Chinese stocks have been very oversold for months. Granted the big bounce from the October lows means they are less oversold now but there is still room to move higher. Looking at the FXI it appears to have been forming a bull-flag pattern and today's move is a breakout.

I am suggesting bullish positions now but only if both the FXI and the S&P 500 index both open positive tomorrow. More nimble traders may want to wait for a dip back toward the $34-33 area before considering new bullish positions. Our multi-week target is $39.50.

If the FXI can trade over $36.00 it would reverse its Point & Figure chart into a new buy signal.

FYI: The top five components in the FXI are China Mobil, China Construction Bank, Industry and Commercial Bank of China, CNOOC (oil company), and PetroChina Co (another oil company). You view percentage of the ETF here:
http://us.ishares.com/product_info/fund/overview/FXI.htm

*See Entry Point Details Above*

- Suggested Positions -

buy the NOV $35 call (FXI1119K35) current ask $1.57

Annotated Chart:

Entry on October xx at $ xx.xx
Earnings Date --/--/--
Average Daily Volume = 30 million
Listed on October 24, 2011