Emulex Corp. - ELX - close: 11.01 change: +0.07

Stop Loss: 10.59
Target(s): 12.10
Current Gain/Loss: unopened
Time Frame: 4 to 8 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
Shares of ELX have been soaring on better than expected earnings and revenue numbers. The company, like many data-storage companies, had been plagued by problems with the massive Thailand flooding. However, ELX claims that it's back up to full production and management sees the positive momentum in the fourth quarter continuing into the first quarter this year.

Shares of ELX are without a doubt overbought given its surge from $7.00 in early January to $11.00. Yet the momentum doesn't seem to be slowing. I do consider this an aggressive trade and we want to keep our position size small to limit our risk.

I am suggesting a trigger to open positions at $11.15 with a stop loss at $10.59. Our exit target is $12.10. The Point & Figure chart for ELX is bullish with a long-term $19.50 target.

Trigger @ $11.15 (small positions)

Suggested Position: buy ELX stock @ (trigger)

- or -

buy the Mar $11 call (ELX1217C11) current ask $0.50

Annotated chart:

Entry on February xx at $ xx.xx
Earnings Date 04/25/12 (unconfirmed)
Average Daily Volume = 2.0 million
Listed on February 07, 2011