Editor's Note:

We want to keep our position size small!

The market rallied on news of a fiscal cliff deal but the deal could end up being a bitter pill for the market to swallow. The initial euphoria of avoiding the cliff might sour. Be cautious on adding new positions.

The market's trend is up but I'm worried if stocks will see any follow through.



NEW DIRECTIONAL CALL PLAYS

Snap-on Inc - SNA - close: 80.86 change: +1.87

Stop Loss: 78.90
Target(s): 84.50
Current Option Gain/Loss: Unopened
Time Frame: 2 to 3 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
Snap-on tools was showing strength today with a bullish breakout past resistance near $80.00. The stock has been trying to get past this level for about two months. Traders bought the dip midday near the $80.00 level.

I consider this a short-term trade. It will probably only last a few days. Our target is $84.50. We'll start with a stop loss at $78.90 but more conservative traders could use a tighter stop loss.

I would use small positions!

- Suggested Positions - (Keep positions small)

buy the Feb $85 call (SNA1316B85) current ask $0.85

Annotated Chart:

Entry on January xx at $ xx.xx
Average Daily Volume = 239 thousand
Listed on January 02, 2012


Trimble Navigation - TRMB - close: 61.52 change: +1.74

Stop Loss: 59.75
Target(s): 64.75
Current Option Gain/Loss: Unopened
Time Frame: 2 to 3 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
This is another short-term trade. TRMB has spent about three weeks consolidating under resistance at the $60.00 level. Today's market rally helped push TRMB past this key level. Now the stock is hitting new all-time highs.

I am suggesting new positions now. More nimble traders may want to try and buy calls on a dip in the $61.00-60.50 area. We are aiming for $64.75 but more aggressive traders could aim higher.

We do want to keep our position size small to limit our risk.

- Suggested Positions - (Keep positions small)

buy the Jan $60 call (TRMB1319a60) current ask $2.25

Annotated Chart:

Entry on January xx at $ xx.xx
Average Daily Volume = 750 thousand
Listed on January 02, 2012