Editor's Note:

In addition to tonight's new candidate, consider these stocks as possible trading ideas and watch list candidates:

(bullish candidates): JOSB, ALTR, ATMI, PHM, LEN


KB Home - KBH - close: 10.92 change: +0.16

Stop Loss: 9.99
Target(s): 13.50
Current Gain/Loss: unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
Homebuilding stocks have been very strong performers this year. Now after a brief pause the group looks poised to continue higher. Shares of KBH are consolidating under resistance near the $11.00 level. A breakout higher could produced another short squeeze. The most recent data listed short interest at 41% of the 65 million-share float.

I am suggesting a trigger to open bullish positions at $11.10. Bear in mind that KBH can be a volatile stock. Readers may want to keep their position size small. Our exit target is $13.50. FYI: The Point & Figure chart for KBH is bullish with a long-term $20.00 target.

Bullish Trigger @ $11.10

Suggested Position: buy KBH stock @ $11.10

- or -

buy the Mar $12 call (KBH1217C12) current ask $0.41

Annotated chart:

Entry on February xx at $ xx.xx
Earnings Date 04/05/12 (unconfirmed)
Average Daily Volume = 7.8 million
Listed on February 08, 2011