Three names for you to check out before pulling the trigger. (October 08, 2012)

by DAN SWHC RGR CAB 
I’m Dan Fitzpatrick at StockMarketMentor.com and now OptionMarketMentor.com as well; so if you’re interested in options you need to get over there and check that out. Okay, it’s a Monday, October 8th, let’s get to it. I’m looking at some guns and ammo stocks here, some defense stocks and I’m not talking about Raytheon ( $RTN Raytheon Company ) and some of the others, Lockheed Martin ( $LMT Lockheed Martin Corporation ), I’m talking about guns here. These have been trading higher pretty much for the entire year; been pretty volatile here with Smith & Wesson ( $SWHC Smith & Wesson Holding Corporation ) and as the election nears you’re going to see these stocks get increasingly volatile, at least that’s what I think. But here’s the deal, this stock is close to the 50-day moving average now and it’s trading at a little bit of a tight volatility squeeze. Look how tight the Bollinger Bands are, that reflects low volatility. You combine that with the stock being down at the lower Bollinger Band, this is a stock that I’m wanting to buy here, anticipating an upside move; but if you’re taking that trade just know that first of all the 50-day moving average is only relevant as a general trend indicator not as a line of support, you can see that here. So I wouldn’t really be interested in using the 50-day moving average as reference for stops, rather, because of the volatility here, I would be more interested in using today’s intraday low of, we’ll call it $10.00, so maybe $9.95 would be a better deal, that’s like a 50 cent risk on a $10.50 stock which isn’t a bad risk reward on a stock that’s trending higher and at the bottom of the trading range. So that’s something to think about. Another one, Ruger, Sturm, Ruger ( $RGR Sturm, Ruger & Company ), the reason I mention this is because it’s pulled back to a key buy point, the 200-day moving average. This is one that I would use the 200-day moving average as a reference, that’s at $43.81; so if you’re buying this stock keep the stop just a little bit below $43.81 call it $43.75, something like that. Now on this one note the share volume, a third of a million shares, so it’s pretty ill-liquid really, Smith and Wesson ( $SWHC Smith & Wesson Holding Corporation ) a little bit better. And then my other gun stock is Cabela’s ( $CAB Cabela’s Inc ), this doesn’t trade too much either, $608,000, so less than a million shares on these two. On Sturm, Ruger ( $RGR Sturm, Ruger & Company ) and Cabela’s ( $CAB Cabela’s Inc ), Cabela’s ( $CAB Cabela’s Inc ) is also in a nice uptrend, it’s not at great buy point now, it’s at a great OMG, I’m glad I own it point, but if you’re an aggressive trader you can go ahead and keep trading this trend and hold the stock because I think it will ultimately continue to move higher over the next month or so. Anyway, those are three for you; just make sure you are looking at buying them at support. Cabela’s ( $CAB Cabela’s Inc ), is again tough, it’s way above support, Smith & Wesson ( $SWHC Smith & Wesson Holding Corporation ) is pretty much right out support, and Ruger ( $RGR Sturm, Ruger & Company ), definitely at support; so those are three for you. Okay members, we’re going over some of the oil and gas trades and then also some metals and mining; so I want you get over there now and check that out.

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