Editor's Note:

In addition to tonight's new candidates, consider these stocks as possible trading ideas and watch list candidates:

(bullish candidates) IJR, XLE, CLR, DVN, WSO, CHTR, BCR, PXD, CLB, CKH, PX, BXP, APD, ROK, BRK.B, GD, WCC, NOC, DVA, and ALV.

While we are seeing a lot of bullish candidates the rally in tech stocks is looking pretty extended. We are very tempted to buy a June put on the QQQ in an effort to capture a correction in the NASDAQ-100. At the same time we are facing the prospect of the market extending its gains as money managers window dress their portfolio in time for the quarter end (March 31st). I'm going to pass on the QQQ put idea tonight but it's an idea we may revisit between now and the end of March.


NEW DIRECTIONAL CALL PLAYS

Lufkin Industries - LUFK - close: 79.93 change: +1.57

Stop Loss: 76.99
Target(s): 84.85
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
LUFK is an oil services stock. After a -$10 correction from $85 to $75 the stock is on the mend. Shares are now testing resistance near $80.00. I am suggesting we use a trigger to buy calls at $80.75 with a stop loss at $76.99, which is just under the 50-dma. Our target is $84.85. More aggressive trades could aim higher. The Point & Figure chart for LUFK is bullish with a $97 target.

Trigger @ $80.75

- Suggested Positions -

buy the Apr $85 call (LUFK1221D85) current ask $2.00

Annotated Chart:

Entry on March xx at $ xx.xx
Earnings Date 04/19/12 (unconfirmed)
Average Daily Volume = 494 thousand
Listed on March 17, 2012


NEW DIRECTIONAL PUT PLAYS

Polypore Intl. Inc. - PPO - close: 36.40 change: -0.99

Stop Loss: 38.65
Target(s): 31.00
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
PPO is clearly not participating in the market's rally. Shares have been hit by various concerns regarding its battery business. Investors are selling into strength and PPO has a bearish pattern of lower lows and lower highs. It just completed a new lower high this week near $38.50.

I am suggesting small bearish positions at the open on Monday with a stop loss at $38.65. Why small positions? We want to limit our risk because being bearish on PPO is a popular trade. The most recent data listed short interest at 34% of the 46.3 million-share float. It is this short interest that produces these brief little short squeezes higher that keep failing (at least they are failing so far). Our target is $31.00 or the dotted trend line of lower lows (see chart below). FYI: The Point & Figure chart for PPO is bearish with a $16 target.

- Suggested Positions -

buy the Apr $35 PUT (PPO1221P35) current ask $1.80

Annotated Chart:

Entry on March xx at $ xx.xx
Earnings Date 05/03/12 (unconfirmed)
Average Daily Volume = 2.4 million
Listed on March 17, 2012