Editor's Note:
After a two-week consolidation this services company looks ready to breakout to new highs again.

- James


W.W. Grainger Inc. - GWW - close: 125.95 change: +0.17

Stop Loss: 122.95
Target(s): 129.90, 134.00
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes

Company Description:
W.W. Grainger, Inc. with 2009 sales of $6.2 billion is North America's leading broad line supplier of maintenance, repair and operating products with an expanding presence in Asia and Latin America. (source: company press release or website)

Why We Like It:
Right now investors are loving the equipment stocks and GWW continues to trade with a bullish trend of higher lows. On a short-term basis the stock looks poised to breakout from the current two-week consolidation. I am suggesting we buy calls with a trigger to open positions at $126.75. If triggered our first target is $129.90. Our second target is $134.00. The stock could see a little short squeeze since the most recent data listed short interest at more than 5% of the 58.5 million share float (which isn't very big as far as floats go). FYI: The Point & Figure chart is bullish with a $140 target.

Trigger to launch bullish positions @ 126.75

Suggested Position: Buy the 2011 January $130 calls (GWW1122A130) current ask $2.55

Annotated Chart:

Entry on November xxth at $ xx.xx
Earnings Date 01/25/11 (unconfirmed)
Average Daily Volume = 567 thousand
Listed on November 22nd, 2010