Editor's Note:

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

WXS - the trend in WXS is bullish. I would be tempted to buy calls on a rally past $65.25.

CMP - this basic material stock is breaking down. The close under $70.00 could be a bearish entry point.

ORLY - shares are still trending higher. A rally past $91.00 can be used as a bullish entry point.

MNST - I would be tempted to open bullish positions on a rally past $61.25.

DECK - The trend in DECK is down and the pattern of lower highs is suggesting another breakdown soon. Consider bearish positions on a drop under $66.00.

FDO - most of the "dollar" stores are performing well. A rally past $58.00 should break the four-month trend line of lower highs and act as an entry point for bullish positions in FDO.


NEW DIRECTIONAL CALL PLAYS

Check Point Software - CHKP - close: 62.00 change: +0.72

Stop Loss: 59.75
Target(s): 68.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
CHKP is bouncing near prior resistance, which is acting as new support thanks to traders buying the dip. The stock has been consolidating lower the last four and a half days. The stock reversed higher today and displayed relative strength with a +1.1% gain. A rally from here could easily push CHKP to new ten-year highs.

I am suggesting a trigger to buy calls at $62.25 with a stop loss at $59.75. More conservative traders may want to use a stop under today's low at $60.77 instead. FYI: The Point & Figure chart for CHKP is bullish with an $88 target.

Trigger @ $62.25

- Suggested Positions -

buy the Apr $62.50 call (CHKP1221D62.5) current ask $1.45

- or -

buy the May $65 call (CHKP1219E65) current a$ 1.15

Annotated Chart:

Entry on March xx at $ xx.xx
Earnings Date 04/17/12 (unconfirmed)
Average Daily Volume = 1.3 million
Listed on March 22, 2012


NEW DIRECTIONAL PUT PLAYS

Schnitzer Steel Industries - SCHN - close: 40.33 change: -0.92

Stop Loss: 42.75
Target(s): 35.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
Basic material names and steel stocks have been underperforming. Now SCHN finds itself testing significant support at the $40.00 level. A breakdown here could signal a major move lower. I am suggesting a trigger to buy puts at $39.75 with a stop loss at $42.75. Our exit target is $35.50. More aggressive traders could aim lower but we do not want to hold over the earnings report on April 5th.

Traders should note that we do want to keep our position size small. The most recent data already list short interest at 8.1% of the very small 24.8 million-share float. Any unexpected bounces in SCHN could spark a short squeeze so we want to limit our exposure.

FYI: The Point & Figure chart for SCHN is still bullish but a breakdown under $40.00 would create a new quadruple bottom breakdown sell signal.

Trigger @ $39.75 (small positions)

- Suggested Positions -

buy the Apr $40 PUT (SCHN1221P40) current ask $1.75

Annotated Chart:

Entry on March xx at $ xx.xx
Earnings Date 04/05/12 (confirmed)
Average Daily Volume = 326 thousand
Listed on March 22, 2012