Ford (F) April 2011 $14 Calls (3) @ .90

With several Japanese auto manufacturers weakened by climatic events, Ford Motors (NYSE: F) may have got the break it badly needed. Both Honda and Toyota motors have been weakened from the destruction overseas. Coincidentally, Ford and General Motors have seen some buying activity on speculation of increased market share. The chart clearly shows an upsloping support line providing support to the stock. We used the latest test of this line as a buying opportunity.

Drilling and exploration has been hit and miss over the past few years as British Petroleum caused a drilling moritorium after one of its ocean wells exploded. That hasn’t stopped a few of the small cap names from producing modest gains. Hercules Offshore (NASDAQ: HERO) is one driller with the right ingredients for a big move in share price. It has a low share float and high short interest (7%) providing explosive potential. With oil over $100 per barrel we believe drillers are poised for huge growth going forward. The stock has formed a pennant pattern on its 3-month chart and has used the 13-day exp moving average as support.

While you may think of a pizza franchise being a boring investment, Papa Johns (NASDAQ: PZZA) may prove otherwise. Taking over the pizza world, Papa Johns operates over 3,000 stores in 50 states. The company has a solid looking chart, breaking out of a 2-year base in recent weeks. As the company trends higher in coming weeks, we think it could make another run at blue skies. While the stock faces headwinds like rising commodity costs and weak consumer strength, sales somehow continue rising. Markets have sold off in recent trading, but Papa John’s continues to grind higher. Watch this stock over the next 3-months as it gains upside momentum.

After two years of consolidation in a large triangle pattern Sprint (NYSE: S) has made a technical breakout. Trading over 150 million shares and gapping up, Sprint pierced through $4.80 trendline resistance and hasn’t looked back yet. With followed through momentum and continued talk of a deal with T-mobile the company looks poised to make a run. Judging by prior reaction highs the stock should be able to hit $5.35 before meeting resistance.

Ford Motors (F) is testing 2-year support after making a recent high around $19.00 during earnings season. Since its high the stock has been hammered on concerns of slowing growth in Chinese markets and stagnant US markets. Today’s candle and low at $13.85 represents a key support level as shown on the chart above.

F5 Networks (FFIV) gave us a headfake today as the market moved lower on the US jobs report. Testing a major trendline, F5 found support and is now moving back up in a tough tape. We expect strength in F5 Networks going forward until that major support line is violated to the downside. The head & shoulders pattern shown in the chart above remains intact, although it has not been confirmed yet.

Scenario 1:  Outright Approval, No Restrictions – 20% Chance  (+ 10 pts)

Scenario 2:  Approval with limited application - 50% Chance (+ 6 pts)

Scenario 3: Another Delay – 20% Chance (- 5.5 pts)

Scenario 4: Outright Rejection – 10% Chance (Massive Drop)

Long Straddle Explained

The strategy is a bet on increased volatility in the future as profits from this strategy are maximized if the underlying security moves up or down from present levels. Should the underylying security’s price fail to move or move only a small amount, the options will be worthless at expiration. Investopedia.com

For this trade we used the March 19th puts and July 16th calls. Any negative decisions from the FDA would send HGSI down immediately while positive outcomes may take longer to play out. Human Genome Sciences has already began manufacturing the drug, so shipments would be nearly immediate. The best outcome for this straddle would be extremes in outcome either positive of negative since it depends on volatility for success.

HGSI JUL 16 2011 25.00 CALL @ $3.80
HGSI MAR 19 2011 26.00 PUT @ $2.20
Total Cost: $600
Breakeven $20 or $31.00 Less Time Premium

Michigan based energy company DTE Energy (NYSE: DTE) has seen its stock price base between $44-$47 per share this past year. Recent trading activity should generate more excitement as the stock broke above $47.55 with higher volume. If we see follow through into next week DTE could make a 3 point run and a move toward blue skies.

Solar earnings reports have been largely bullish with the exception of First Solar (FSLR) last week. The charts of some of these solar stocks look attractive for speculative money. LDK Solar Co (NYSE: LDK) is no exception, showing a clear cup & handle formation on a 4-month chart. The pattern has a $15.00 neckline and support at $13.50, with 31% of the float held short. With high energy prices like oil lingering near $100 per barrel, corporations and governments may finally commit to solar power technology in 2011. Solar projects may finally become “economical” and “sensible” with inflated energy prices.