10 Charts for Bulls

Week of May 24th to May 28th Events

I provide the week ahead preview to my subscribers in the weekly Options Hunter Newsletter. Here is a sneak peak at the events you should be watching this week:

Week Ahead: Earnings are few and far between this week as the season comes to a close but we will hear from Medtronic, Campbell's Soup, Heinz, CostCo, NetApp, AutoZone, Tiffany's, Toll Brothers, American Eagle, Big Lots, J Crew, Blue Coat Systems, Take Two, and OmniVision. Housing data including existing home sales, Case Shiller, and New Home Sales are in focus in the front half of the week for economic data, while GDP, Personal Income, Consumer Sentiment, and Chicago PMI dominate the latter half of the week. It is also a fairly light schedule for Fed speakers with Bullard on Tuesday and Thursday, and Lacker on Wednesday. A look at the upcoming schedule this week:

Monday: Exiting Home Sales; Earnings from CPB, DCI, PVH; Analyst Meetings at HK, ARBA, HRS; BofA/Merrill Services Conf. (XRX, IT, CATM, MHP, GPN, IPG)

Tuesday: S&P Case Shiller, Consumer Confidence, State Street Investor Confidence, Bullard Speaks at 11:15am; Earnings from MDT, DSW, HEI, NZ, TIVO, AZO, CBRL, FLO, SAFM; Analyst Meetings at AMSC, FLEX, MFE, NICE; B. Riley Investor Conf. (SNAK, SHOO, VLCM, HIL, TYL), BofA/Merrill Services Conf. (CBG, WU, ADS, DV, VRSK, EXBD, ESI, ACN), Stephens Spring Investment Conf., UBS Global Oil and Gas Conf. (DVN, HAL, BHI, NBL, NBR, NFX, APA, HP, OXY, RDC, COP, UNT, PXD)

Wednesday: Durable Goods Orders, New Home Sales, Lacker Speaks at 4:15pm; Earnings from DBRN, JAS, AVGO, SIGM, SMTC, BWS, SYNO, TOL, AEO, FRED, PAY, NTAP, RUE; Analyst Meetings at DNR, ITRI, NWL, VQ,ARW, FOE, SFG, TMO, NTRS, WRI, YHOO, EW; B. Riley Investment Conf., BofA/Merrill Services Conf. (V, COCO, APOL), Barclays Communications and Media Conf. (AMD, CMCSA, ATHR, INTC, LEAP, SWKS, QCOM, LINTA), Citi Global Healthcare Conf. (DNDN, MRK, GILD, HUM, HOLX, REGN, BAX, MHS, MD, PFE, CAH, CELG, AET, ISRG, VRUS, VVUS, AUXL, MDT, TRGT, AMLN, XNPT, POZN, INCY, WPI, UTHR), Janney Montgomery Consumer Conf. (OMX, HD, ERTS, LOW, GMCR, MED, VPRT, HLF, BJ), Kaufman Cloud Computing Conf. (SFSF, RAX, SVVS, CRM, TMRK, AKAM, BMC), UBS Global Oil and Gas Conf.(MRO, CHK, SWN, APC, COG, RRC, NE, CAM, KWK, FST, CLR), Wells Fargo Gaming Conf. (PENN, IGT, MAR, GET)

Thursday: GDP, Jobless Claims, Fed's Balance Sheet, Bullard Speaks at 2:30pm; Earnings from DMND, ESL, GES, JTX, OVTI, SEAC, TMRK, BRLI, COST, GCO, MNRO, HNZ, BCSI, BIG, HGG, JCG, MOV; Analyst Meetings at BRS, DNR, SYMC, NEM, ES, BGCP, PSSI, AEL; Barclays Media and Tech Conf. (T, MOT, CAVM, TXN, BRCM, NTGR, HLIT), Citi Global Healthcare Conf. (ALTH, BDX, MCK, IART, VRTX, MYGN, AMAG, MNTA, COV, NPSP, CFN, CLDX, ISIS, KERX, HGSI), UBS Global Oil and Gas Conf. (EOG, SD, HERO, TDW, RIG, XEC, PXP, WFT, DRC, HES, OIS, SFY)

Friday: Personal Income, Chicago PMI, Consumer Sentiment, Farm Prices; Earnings from MENT;

Polycom (PLCM) - Inverse Head and Shoulders Breakout

Broke out past key resistance on 1.7X relative volume

Ready for an easy move to $35 highs from 2007

Orient Express Hotel (OEH): By the Book Breakout

Triangle Breakout on 2.7X Relative Volume Above Upper Keltner Channel

Shares closed at $12.30 today, and I see this as a double in 2010 - Target $25

Verisign (VRSN): Great Breakout and Bullish Action

Verisign shares broke out of an ascending triangle implying a move that is likely to see resistance at $33, more than 25% higher from here. The owner of the .com and various other Internet identifications is likely to continue to experience strong growth, and recent price increases should boos the bottom line. Also, cyber security continues to be a major threat, and VRSN has authentication and security software. There is also likely to be a surge in business on the mobile end with most smart phones having internet access. Shares trade 15.3X next year's earnings estimates, and just 3.3X cash value.

Today, a large options trade suggested a sustained move higher in shares:

VeriSign (VRSN) traded a 2,000 contract January 30/25 bull reversal trading for a $1 credit, selling the $25 puts and buying the $30 calls in a leveraged bullish bet.

The chart set-up is below, and a break through the 200 week EMA that coincides with the 38.2% Fib level of $26.25 is a major buy signal.

Finisar (FNSR): Major Breakout

The $800M market cap maker of networking equipment is on a long road back, trading as high as $410 in the Tech Bubble, and as low as $1.69 in the March lows. Shares are now trading at $12.22 and breaking out of an inverse head and shoulders, implying we could see a move North of $20 by 2012, a solid 66% gain. The pattern is a bit sloppy, but it still implies a major reversal move.

Defense Stocks on the Offensive

The Aerospace/Defense Sector is hot and the stocks are breaking out. As a group of the 25 stocks that trade 100,000+ shares a day with a market cap greater than $300M it is one of the cheapest groups on valuation as well, here are some stats on the average company metrics:

Forward P/E: 13.5X; Price/Sales: 1.3X; Price/Book: 2.6X; Price/Cash: 13X; Price/Free Cash Flow: 20.9X; EPS Growth this Year 10.7%

There are some great individual value plays here, names that are lesser known like Esterline (ESL) and Triumph Group (TGI).

Here are a few of the charts I like in this group, break outs with a lot of upside:

BE Aerospace (BEAV), Boeing (BA), General Dynamics (GD), Goodrich (GR), L-3 (LLL), Northrop Grumman (NOC), Orbital Sciences (ORB), and Raytheon (RTN). Lockheed Martin (LMT) is the noticeable laggard.

Henry Schein (HSIC) Cup and Handle Breakout

Medical Device Firm Trading at a Good Value and with a 9.83 Short Ratio, Target of $63

2010: The Year of Large Cap BioTech

Starting off 2010 the markets had a rough January, losing around 4% on the S&P, often a bearish indication for the year ahead, but BioTech large caps are seeing a resurgence. Breakouts are developing in Amgen (AMGN), Cephalon (CEPH), OSI Pharma (OSIP), Gilead (GILD), Genzyme (GENZ), Acorda (ACOR), Biogen (BIIB), Dendreon (DNDN), Talecris (TLCR), Regeneron (REGN), and United Therapeutics (UTHR).

An FDA approval of Auxilium's (AUXL) XIAFLEX today could also keep the bullish tone for the group.

One laggard has been Onyx (ONXX), so keep an eye on that one.

Campbell's Soup (CPB) Breaking Out in Down Market

Packaged goods are the best plays with commodity prices falling and Campbells broke out on a volume surge.

FedEx (FDX) Head and Shoulders Reversal

VmWare (VMW) and Wynn Resorts (WYNN): Masterful Gap Fill Plays

I love looking for gap fill plays and sometimes you have to look back a couple of years and I found two great ones with VMW and WYNN today. RSI also broke out in VMW.

Amylin (AMLN): Breaking out Ahead of 3-5 FDA

Textron (TXT) and Illinois Tool (ITW) Breakouts

Flow Serve (FLS): Class 5 Rapid Breakout

AGCO Breaks Out with Room to Run - Target $45

Cummins (CMI): A Diesel Powered Breakout

Looking for a break of that 61.8 Fib Level at $51.55 to Drive this to $60.

Plexus (PLXS): Waiting on $30.90 Breakout

InfoSpace (INSP): A Multitude of Breakouts