Editor's Note:

In addition to tonight's new trade, readers may want to put these stocks on their watch list for an entry point:


Please note that I am concerned for the rally. Stocks are up big off their Tuesday lows. We could see equities spike higher on Friday and then sell-off into the weekend. Investors will want to consider keeping their position size small to limit risk.



EnPro Industries - NPO - close: 30.83 change: +0.72

Stop Loss: 29.25
Target(s): 34.50
Current Gain/Loss: unopened
Time Frame: 2 to 4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
NPO is an industrial stock. If you glance at the weekly chart (not shown) you can see that shares tend to have these big, multi-week and multi-month moves. If you can catch NPO at the turning point it can be a great trade. This week is setting up as a bullish reversal for NPO after a massive drop from $50 back in July to almost $27 earlier this week. The potential for a normal retracement of the move is huge. The recent bounce has also broken a multi-week trendline of lower highs. Actually it looks more like a break out from a bearish channel lower.

I do consider this an aggressive trade. NPO is already up more than +10% off its low for the week. Plus, the jobs report is due out tomorrow morning and that can always create more volatility for the stock market. We want to keep our position small to limit risk.

I am suggesting bullish positions at the open tomorrow but we only want to launch positions if both NPO and the S&P500 index both open positive. We'll target a move to $34.50. More aggressive traders with a longer time frame can aim higher.

*See Entry Point Details Above* (Small Positions)

Suggested Position: buy NPO stock @ the open

- or -

buy the October $30 call (NPO1122J30) current ask $1.80
- there are only 2 weeks left for October options -

Annotated chart:

Entry on October xx at $ xx.xx
Earnings Date 11/03/11 (unconfirmed)
Average Daily Volume = 282 thousand
Listed on October 06, 2011