Daily Stock Market Equity and Options Trading Commentary

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Monday, June 29, 2009

Weekly Bull Stock Watch: A Tall List for the Short Week

In this week's report I am covering 20 different stocks, as I have found many stocks with very bullish techincals on them. This week there does not seem to be a specific trend among the stocks like last week's, which were mostly from the healthcare sector. To get a detailed list of what I screen for in the Bull to Bear ratio check out my blog post here.

The stocks in the list below are ranked alphabetically.

Company Ticker Bull to Bear Ratio
3PAR Inc PAR 14:0
Acme Packet Inc APKT 14:0
Air Transport Services Group Inc ATSG 14:0
Allied Healthcare International Inc AHCI 13:0
Avanir Pharmaceuticals Inc AVNR 14:0
AVI BioPharma Inc AVII 14:1
BioScrip Inc BIOS 14:0
Bovie Medical Corp BVX 14:0
Bridgepoint Education Inc BPI 13:0
Cray Inc CRAY 14:0
Endologix Inc ELGX 14:0
Lannett Co Inc LCI 15:1
MoneyGram International Inc MGI 14:0
Rackspace Hosting Inc RAX 14:0
Rockwell Medical Technologies Inc RMTI 14:0
Spectrum Control Inc SPEC 14:0
York Water Co YORW 14:0 Inc UBET 14:0
Zion Oil and Gas Inc ZN 15:1

All of the stocks listed above have excellent technicals on them; however I like 3PAR, and Rackspace Hosting. The reasons and how I am trading them are detailed below.

The Trades:

3PAR (PAR): is a utility storage company, which has a ton of potential growth in the future. The company has been listed for less than a year, and they currently make money. The estimated earnings growth rate for 2010 is 78%, and 125% in 2011. This stock has already been on a tear but by looking at the chart, I think it can keep going. If you can chart stocks, take a look at the ascending triangle formed on this stock where it ran into resistance at the 11 range. As of Wednesday the stock closed above resistance at 11, and kept on moving up. Friday the stock ripped above its 10 day moving average. It will be interesting to see if this stock can keep up the move.

I will be accumulating some call options on this stock on any weakness. I am most interested in the July or August 12.50 call options. To learn more about options click here.

Rackspace Hosting (RAX): is a company in the business of hosting and cloud computing. They also make money and have huge potential growth. The expected earnings growth rate for 2009 is 130%, and 43% for 2010. On Friday the stock exploded 7% to the upside with conviction. The 10 day average volume for this stock is just over half a million shares, the volume Friday was 6.89 million shares. There is an investor conference call Tuesday June 30, which would be great to get in on if you're interested in this company; I know I'll be listening in.

I will be looking to get into some call options as well on this company. As of now they do not have any options out above the 15 strike range. I think I will be looking to scoop up some call options on this for the September 15 strike, and hope for a pop so I can complete a call spread on this stock to return some of my risk immediately (for more info on call spreads and other advanced option strategies click here).

Opening call positions is very risky as you can lose 100% of your investment if the desired strike is not met, however the return can be much greater than holding common shares. I purchase calls when stocks have experienced a large gain in a short time period, as these quick risers can crash just as fast. However if I were purchasing common shares of these companies I would wait for a 7%-10% pull back, and would use tight stop losses.

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