NEW DIRECTIONAL CALL PLAYS

Energen Corp. - EGN - close: 70.74 change: +1.77

Stop Loss: 67.95
Target(s): 75.75
Current Option Gain/Loss: Unopened
Time Frame: exit PRIOR to earnings in late January
New Positions: Yes, see below

Company Description

Why We Like It:
EGN is in the basic materials sector. The company operates in the oil and natural gas industry. The stock was having an amazing 2013 performance with shares almost doubling by October. Then the upward momentum peaked and shares reversed on a disappointing late October earnings report. Since then EGN has underperformed the market and its peers in the energy industry. Fortunately for shareholders the correction, all seven weeks of it, appears to be over. EGN found support near $66.00 and now it's rebounding.

Friday's high was $70.78. I am suggesting small bullish positions if EGN can trade at $71.05. If triggered our target is $75.75 since the $76.00-76.50 area looks like resistance. I am suggesting small positions to limit our risk.

Trigger @ 71.05 *small positions*

- Suggested Positions -

buy Feb $75 call (EGN1422B75) current ask $2.25

Annotated Chart:

Entry on December -- at $---.--
Average Daily Volume = 727 thousand
Listed on December 28, 2013


General Dynamics - GD - close: 95.00 change: +0.16

Stop Loss: 93.85
Target(s): 99.50
Current Option Gain/Loss: Unopened
Time Frame: exit PRIOR to earnings in late January
New Positions: Yes, see below

Company Description

Why We Like It:
This is a momentum trade. GD is in the industrial goods sector. The company is one of the largest aerospace and defense names in the country. The defense industry stocks have been showing relative strength. The recent two-year U.S. budget deal passed by congress and the senate eliminated the sequestration defense spending cuts, which is good news for the group.

The current rally in GD has broken out above its trend line of higher highs. This could signal an acceleration in the rally as GD sprints toward what will likely be round-number, psychological resistance at the $100.00 mark.

I am suggesting small bullish positions if GD can trade at $95.25. If triggered our target is $99.50. More aggressive traders may want to aim higher since the Point & Figure chart for GD is bullish with a $105 target. I am suggesting small positions because GD is arguably overbought with an almost non-stop rally from its December lows near $89.

Trigger @ 95.25 *small positions*

- Suggested Positions -

Buy the Feb $95 call (GD1422B95) current ask $2.20

Annotated Chart:

Entry on December -- at $---.--
Average Daily Volume = 1.1 million
Listed on December 28, 2013