United States Steel (X)
The steel and iron industry is a strong sector with a lot of bullish potential during this summer. So take a look at United States Steel (X).
Now, X does have to overcome resistance near the $42 level, but I fully expect it can do that sooner rather than later. Think of resistance levels as brick walls. Every time a stock hits the resistance, it takes another chunk out of the wall, so that it's left weakened. All X needs is one good hit to punch its way through.
The best trades in X are the $40 strike calls, whether you choose to play that more conservatively with the September calls, or take on more risk with the August options. My short-term target for X is $50.
Apple (AAPL)
All is right with the world. Steve Jobs is back in the captain's chair at Apple (AAPL) after a liver transplant, and the new iPhone 3GS is selling well (around a million units right out of the gate).
AAPL has withstood challenges from Palm (PALM) and Research In Motion (RIMM), along with Mr. Jobs' absence, to soar more than 60% off its March bottom. With AAPL's products as popular as ever, look for the momentum to continue into the summer.
Buy the AAPL Aug 135 Calls (APVHG).
Apple is one of the Top 10 Summer Stocks.
Microsoft (MSFT) appears to be hitting the right buttons with Bing, its new search engine, which is impressing critics. But that's just one of a number of new products the company is slated to roll out. Windows 7 is getting good press (goodbye, Vista!), and Xbox 360 continues to produce for the bottom line. With the product pipeline full of promising offerings, the stock has a powerful wind at its back.
Buy the MSFT Aug 23 Calls (MSQHQ).
Microsoft is one of 6 Tech Stocks to Own for the Rest of 2009.
Nucor Corp. (NUE), the second-largest U.S. steelmaker, appears to be in an ascending triangle pattern, which is a short-term bullish pattern that takes approximately three months to play out. An ascending triangle is characterized by a flat top and a rising bottom trendline. However, NUE's ascending triangle has more of a corrective nature. It recently almost hit its bottom trendline, which means a bounce back typically follows. It has to hurdle its resistance just below the $50 mark, but I believe it will do that and climb right up to the $55 level.
The best way to take advantage of this impending move is to buy the NUE August or September $55 strike calls. They both appear to be really great plays, especially at these levels.
Cliffs Natural Resources (CLF)
Iron and coal mining company Cliffs Natural Resources (CLF) is ready for a breakout. It is in a very similar pattern to Nucor Corp. (NUE), but, again, it's not a classic ascending triangle because CLF's historical pricing involved more of a consolidation after previously hitting resistance around the $31 level. After CLF makes it past that, I'm looking for the stock to take a small pause between $32 and $33, and then zoom up close to the $40 level.
The best way to play this potential move is with the CLF August and September $30 strike calls.
Get 10 Tips to Getting Started With Technical Analysis.
Cisco Systems (CSCO)
Everyone knows Cisco Systems (CSCO) as the giant in the networking arena. With the technology sector poised to retain its relative strength leadership through 2009, we like some of the larger companies in the group to continue outperforming the market.
For now, CSCO is one that remains off many analysts' radar screens, as just more than half those covering the stock have it ranked a buy. We typically like these "underappreciated" stocks, as they show room for upgrades and, thus, higher prices.
The CSCO Aug 18 Calls (CYQHU) appear positioned to provide a potential "doubler" as the stock moves back to its highs this summer.
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