Editor's Note:

Trying to launch new positions while we have yet to see the market's reaction to the jobs number on Friday morning is a higher-risk bet. I suggest readers take a step back on Monday and wait to see how the markets move on this data before considering new positions.


Tractor Supply Co. - TSCO - close: 59.40 change: +1.35 stop: *varies*

Company Description:
Tractor Supply Company operated 930 stores in 44 states. The Company's stores are focused on supplying the lifestyle needs of recreational farmers and ranchers. The Company also serves the maintenance needs of those who enjoy the rural lifestyle, as well as tradesmen and small businesses. Stores are located in towns outlying major metropolitan markets and in rural communities. The Company offers the following comprehensive selection of merchandise: (1) equine, pet and small animal products, including items necessary for their health, care, growth and containment; (2) hardware and seasonal products, including lawn and garden power equipment; (3) truck, towing and tool products; (4) work/recreational clothing and footwear for the entire family; (5) maintenance products for agricultural and rural use; and (6) home decor, candy, snack food and toys. (source: company press release or website)

Why We Like It:
Investors have been loving consumer related names even though consumer spending has yet to turn healthy. The retail sector should have pretty easy comparisons to last year. TSCO doesn't report earnings until about three more weeks. I suspect the trend will remain higher. However, right now TSCO is churning sideways in the $58-60 zone near its 52-week high. We do not know how the market will react to the jobs number from Friday, April 2nd. Therefore I'm suggesting two different entry points - one entry point if the market rallies and one if it pulls back.

If TSCO sees a pull back the stock should find support in the $55.00 area. I'm suggesting a trigger to buy calls at $55.15 and we'll use a stop loss at $53.45. Our first target would be $59.75.

If TSCO breaks out higher then I'm suggesting a trigger to buy calls at $60.75 (a new high), with a stop loss at $57.75, just under recent support near $58.00. Our first target would be $64.75. FYI: The Point & Figure chart is bullish with a $72 target.


Buy-the-Dip Trigger at $55.15
Suggested Stop loss $53.45

- or -

Buy-the-Breakout Trigger at $60.75
Suggested Stop loss $57.75

Suggested Position: BUY CALL MAY $60.00 (TSCO 10E60.00) current ask $2.30

Annotated Chart:

Entry on April xxth at $ xx.xx
Earnings Date 04/21/10
Average Daily Volume = 310 thousand
Listed on April 3rd, 2010


Cerner Corp. - CERN - close: 85.73 change: +0.80 stop: 88.25

Company Description:
Cerner is transforming healthcare by eliminating error, variance and waste for healthcare providers and consumers around the world. Cerner® solutions optimize processes for healthcare organizations ranging in size from single-doctor practices, to health systems, to entire countries, for the pharmaceutical and medical device industries, and for the healthcare commerce system. These solutions are licensed by more than 8,500 facilities around the world, including approximately 2,300 hospitals; 3,400 physician practices covering more than 30,000 physicians; 600 ambulatory facilities, such as laboratories, ambulatory centers, cardiac facilities, radiology clinics and surgery centers; 700 home-health facilities; and 1,500 retail pharmacies. (source: company press release or website)

Why We Like It:
CERN is a healthcare technology company and when you read their business description it certainly sounds like a worthwhile service. Given the focus on healthcare in this country is also makes sense that the stock has rallied from its late 2008-early 2009 lows in the $30-35 zone to $90 in 2010. Unfortunately for shareholders it looks like the rally is reversing. On the chart below, a weekly chart, you can see that CERN is forming a bearish head-and-shoulders pattern. The most recent rally has stalled under recent near $90.00 and looks like the right shoulder to this bearish reversal pattern.

Last week's low was $83.84. I am suggesting a trigger to open bearish positions at $83.75. If triggered we'll use a stop loss at $88.25. Our target is the $76.50 level since the $75 level and the rising 200-dma look like potential support. If we do not see CERN breakdown under $84.00 soon I will be watching for another failed rally in the $89-90 zone as an alternative entry point for bearish positions. Please note that I consider this play somewhat aggressive due to CERN's higher than normal short interest. The most recent data listed short interest at nearly 14% of the 68.4 million share float. That raises the risk for a short squeeze. You may want to keep your positions limited.

Trigger to open bearish positions at $83.75

Suggested Position: BUY PUT MAY $80.00 (CERN 10Q80.00) current ask $1.95

Annotated Chart:

Entry on April xxth at $ xx.xx
Earnings Date 04/28/10
Average Daily Volume = 526 thousand
Listed on April 3rd, 2010