NEW DIRECTIONAL CALL PLAYS

SPX Corp. - SPW - close: 72.68 change: +1.39

Stop Loss: 69.75
Target(s): 79.00
Current Option Gain/Loss: + 0.0%
Time Frame: Exit prior to earnings on Feb. 14th
New Positions: Yes, see below

Company Description

Why We Like It:
SPW has spent the last couple of weeks digesting gains and consolidating sideways. Yet now the stock is back to showing relative strength and breaking out to new relative highs.

We want to use today's bullish breakout as a new entry point to buy calls. Open positions tomorrow. We'll start with a stop loss at $69.75. Our target is $79.00.

- Suggested Positions -

buy the Feb $75 call (SPW1316B75) current ask $1.l3

Annotated Chart:

Entry on January -- at $---.--
Average Daily Volume = 832 thousand
Listed on January 22, 2012


NEW DIRECTIONAL PUT PLAYS

Lululemon Athletica - LULU - close: 66.13 change: -0.67

Stop Loss: 66.65
Target(s): 60.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
It would seem that Wall Street is losing its faith in LULU. While most of the market has been surging into 2013 shares of LULU have moved the opposite direction. LULU started the year with another failed rally at resistance. Since then the stock has sliced through multiple layers of support. Now LULU is about to breakdown below another couple of key levels of support. There is support near $65.00 and coincidentally support at a long-term trend line of higher lows (see weekly chart below).

We think LULU will breakdown and seems we're not the only ones bearish on the stock. The most recent data listed short interest at 20% of the 101 million-share float. I am suggesting we buy puts when LULU hits $64.75. If triggered our target is $60.50. More aggressive traders could aim lower.

NOTE: because of the high short interest readers may want to keep their position size small.
FYI: The Point & Figure chart for LULU is bearish with a $56 target.

Trigger @ 64.75

- Suggested Positions -

buy the Feb $65 PUT (LULU1316n65) current ask $1.63

Annotated Chart:

Weekly Chart:

Entry on January -- at $---.--
Average Daily Volume = 3.1 million
Listed on January 22, 2012