Editor's Note:

In addition to tonight's new candidates, consider the following as possible trading ideas:

FFIV might be a buy if it can breakout past resistance near $113.75.

GMCR could be a trade for aggressive investors. Look for the stock to fill the gap back toward $65.00.

WFM would be tempting if it could rally past $70.00 again.

CERN is at a turning point. The stock has rallied to resistance near its trendline of lower highs and Friday's session looks like a reversal pattern. My first thought would be to buy puts here with a stop in the $62.75 area, above Friday's high. If CERN can breakthrough the trendline of lower highs, then it becomes a bullish candidate.

- James


NEW DIRECTIONAL CALL PLAYS

Caterpillar - CAT - close: 96.29 change: -0.53

Stop Loss: 95.45
Target(s): 107.00
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
If you believe the world is going to see a global economic slow down in 2012 then CAT is probably a short with the stock testing resistance. I suspect we'll see CAT breakout higher, which could send shorts running for cover. The stock has failed at resistance near $98.00 and its simple 200-dma several times in the last six weeks. A breakout here would be very positive.

I am suggesting we buy calls with a trigger to open positions at $98.55. If triggered we'll use a stop loss at $95.45. Our target is $107.00.

Trigger @ 98.55

- Suggested Positions -

buy the 2012Jan $100 call (CAT1221A100) current ask $3.20

Annotated Chart:

Entry on December xx at $ xx.xx
Earnings Date 01/26/12 (unconfirmed)
Average Daily Volume = 8.1 million
Listed on December 03, 2011


NEW DIRECTIONAL PUT PLAYS

Thermo Fisher Scientific - TMO - close: 46.54 change: -0.50

Stop Loss: 48.25
Target(s): 42.75
Current Option Gain/Loss: Unopened
Time Frame: 2 to 4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
TMO makes a variety of medical instruments and supplies. Unfortunately for shareholders the stock has broken down from a three-month trading range in the $49-55 zone. Last week's oversold bounce has failed at resistance near $48.00. This looks like an entry point to buy puts near the new trendline of lower highs.

I am suggesting put positions on Monday morning with a stop loss at $48.25. Our target is $42.75. FYI: The Point & Figure chart for TMO is bearish with a $41 target.

- Suggested Positions -

buy the DEC $45 put (TMO1117X45) current ask $0.75
(Only 2 weeks left for Decembers)

- or -

buy the JAN $45 put (TMO1221M45) current ask $1.65

Annotated Chart:

Entry on December xx at $ xx.xx
Earnings Date 02/01/12 (unconfirmed)
Average Daily Volume = 3.5 million
Listed on December 03, 2011


Watson Pharmaceuticals - WPI - close: 62.86 change: +0.03

Stop Loss: 64.25
Target(s): 56.00
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
Investors are not impressed with the news that WPI has launched a generic form of LIPITOR, Pfizer's blockbuster cholesterol drug. That might be due to the fact that several companies will be making generic versions of LIPITOR now that PFE has lost its patent protection on it. Yet WPI and Ranbaxy Labs will be the only two generic producers for the U.S. market for the next six months. PFE is fighting this battle by offering a one-month supply of LIPITOR for $4 for the next six months.

WPI's LIPITOR announcement helped produce the big spike higher on Wednesday but WPI was unable to hold these gains. The stock's long-term up trend is in jeopardy. The last couple of months have seen a new trend of lower highs and lower lows building.

This past week WPI has broken down under its 200-dma. I am suggesting we use a trigger to buy puts at $61.75 with a stop loss at $64.25. There is potential support at $60.00 but I am aiming for the $56.00 level.

Trigger @ $61.75

- Suggested Positions -

buy the DEC $60 PUT (WPI1117X60) current ask $0.70
(Only 2 weeks left for Decembers)

- or -

buy the JAN $60 PUT (WPI1221M60) current ask $1.80

Annotated Chart:

Entry on December xx at $ xx.xx
Earnings Date 02/14/12 (unconfirmed)
Average Daily Volume = 1.5 million
Listed on December 03, 2011