Editor's Note:

In addition to tonight's new candidates, these stocks caught my eye as potential bullish candidates worth watching: BNS, ROC and WLK.

- James


BMC Software - BMC - close: 49.51 change: +0.89

Stop Loss: 46.70
Target(s): 54.50
Current Gain/Loss: + 0.0%
Time Frame: 6 to 8 weeks
New Positions: Yes, see below

Company Description:
Business thrives when IT runs smarter, faster and stronger. That’s why the most demanding IT organizations in the world rely on BMC Software across both distributed and mainframe environments. Recognized as the leader in Business Service Management, BMC offers a comprehensive approach and unified platform that helps IT organizations cut cost, reduce risk and drive business profit. For the four fiscal quarters ended December 31, 2010, BMC revenue was approximately $2 billion. (source: company press release or website)

Why We Like It:
Normally I would be concerned that BMC might hit round-number, psychological resistance at the $50.00 mark. Yet shares of BMC have been trading under resistance at $49.00 for weeks. The stock just broke out today and looks poised to run higher. I am suggesting bullish positions now on the breakout. Let's keep our position size small to limit our risk. The market remains overbought here. The February low was $46.78. I'm suggesting a stop at $46.70 although you might be able to get away with a stop closer to the 50-dma. Our first target is $54.50.

FYI: The Point & Figure chart for BMC is bullish with a $78 target.

Open Small Bullish Positions Now

Suggested Position: Buy BMC stock @ current levels

- or -

Buy the March $50 call (BMC1119C50) current ask $1.45

Annotated chart:

Entry on February 11 at $xx.xx
Earnings Date 05/05/11 (unconfirmed)
Average Daily Volume: 1.9 million
Listed on February 10th, 2010

Solutia Inc. - SOA - close: 24.61 change: +0.57

Stop Loss: 23.65
Target(s): 27.25, 29.50
Current Gain/Loss: unopened
Time Frame: 8 to 10 weeks
New Positions: Yes, see trigger

Company Description:
Solutia is a market-leading performance materials and specialty chemicals company. The company focuses on providing solutions for a better life through a range of products, including: Saflex® polyvinyl butyral interlayers for glass lamination and for photovoltaic module encapsulation and VISTASOLAR® ethylene vinyl acetate films for photovoltaic module encapsulation; LLumar®, Vista™, EnerLogic™, FormulaOne®, Gila®, V-KOOL®, Huper Optik®, IQue™, Sun-X™ and Nanolux™ aftermarket performance films for automotive and architectural applications; Flexvue™ advanced film component solutions for solar and electronic technologies; and technical specialties products including Crystex® insoluble sulfur, Santoflex® PPD antidegradants, Therminol® heat transfer fluids and Skydrol® aviation hydraulic fluids. Solutia's businesses are world leaders in each of their market segments. With its headquarters in St. Louis, Missouri, USA, the company operates globally with approximately 3,400 employees in more than 50 worldwide locations (source: company press release or website)

Why We Like It:
This is a momentum play. After an impressive late summer rally shares of SOA have been consolidating sideways under resistance near the $25.00 mark. Now the consolidation is narrowing and shares look ready to breakout again soon. I am suggesting a trigger to open bullish positions at $25.25. If triggered we'll use a stop loss at $23.65.

Trigger @ 25.25

Suggested Position: Buy SOA stock @ $25.25

- or -

Buy the March $25 calls (SOA1119C25) current ask $1.00

- or -

Buy the June $25 calls (SOA1118F25) current ask $2.15

Annotated chart:

Entry on February xx at $xx.xx
Earnings Date 01/26/11
Average Daily Volume: 1.7 million
Listed on February 10th, 2010