PACCAR Inc. - PCAR - close: 37.26 change: -0.42

Stop Loss: 35.85
Target(s): 39.90, 43.00
Current Gain/Loss: unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
In late July shares of PCAR saw a sharp gap down as investors reacted to a 3-cent earnings miss even though revenues beat expectations. The earnings report sparked a handful of analyst upgrades. Unfortunately the market soon began its massive sell-off. Shares of PCAR were pummeled lower. From the July 25th close at $50.40 to the intraday low on August 9th at $34.48 shares of PCAR experienced a -31.5% correction.

The $35 region was support dating back to 2009 and PCAR managed a rebound. Shares continue to look very oversold. The stock has essentially moved too far too fast and it's time for a correction higher. I am suggesting small bullish positions in PCAR now but only if the stock and the S&P500 both open positive on Thursday morning. An alternative entry point would be to wait for another dip near the $35.00 level instead.

If we are triggered tomorrow I'm suggesting a stop loss at $35.85. Our first target is $39.90. Our second target is $43.00.

open small bullish positions if PCAR and S&P500 open positive tomorrow.

Suggested Position: buy PCAR stock @ open

- or -

buy the SEP $40 call (PCAR1117I40) current ask $0.75

Annotated chart:

Entry on August xx at $ xx.xx
Earnings Date 10/25/11 (unconfirmed)
Average Daily Volume = 5.6 million
Listed on August 17, 2011