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CYBXKSS
EAC
FTO

New Long Plays

Cyberonics - CYBX - close: 25.91 chg: +1.36 stop: 22.99

Company Description:
Cyberonics, Inc. was founded in 1987 to design, develop and market medical devices for the long-term treatment of epilepsy and other chronic neurological disorders using a unique therapy, vagus nerve stimulation (VNS). Stimulation is delivered by the VNS Therapy System, an implantable generator similar to a cardiac pacemaker. The VNS Therapy System delivers preprogrammed intermittent mild electrical pulses to the vagus nerve 24 hours a day. The Company's initial market is epilepsy, which is characterized by recurrent seizures. Epilepsy is the second most prevalent neurological disorder. The Cyberonics VNS Therapy System was approved by the FDA on July 16, 1997 for use as an adjunctive therapy in reducing the frequency of seizures in adults and adolescents over 12 years of age with partial onset seizures that are refractory to antiepileptic medications. The VNS Therapy System is also approved for sale as a treatment for epilepsy in all the member countries of the European Economic Area, Canada, Australia and other markets. To date, more than 28,000 epilepsy patients in 24 countries have accumulated over 79,000 patient years of experience using VNS Therapy. The VNS Therapy System is approved for sale in the European Economic Area and in Canada as a treatment for depression in patients with treatment-resistant or treatment- intolerant major depressive episodes including unipolar depression and bipolar disorder (manic depression). VNS Therapy is at various levels of investigational clinical study as a potential treatment for depression, anxiety disorders, Alzheimer's disease, and chronic headache/migraine. The Company is headquartered in Houston, Texas and has an office in Brussels, Belgium.
(source: company press release)

Why We Like It:
Shares of CYBX have and will see more volatility as it spars back and forth with the FDA over its VNS Therapy system. Yet currently the trend is a bullish one. Shares have ignored the market weakness for most of January and the stock just broke out over the $25.00 level on volume about three times the normal. We also noticed that its P&F charts shows a bullish catapult breakout buy signal with a $39.50 target. We want to target a move into the $28-30 range because our time horizon is less than three weeks. CYBX is due to report earnings on February 11th and we do not want to hold over the event. Thus, we would classify this play as more of a higher-risk endeavor.


Picked on January 26 at $25.91
Change since picked: + 0.00
Earnings Date 02/11/05 (unconfirmed)
Average Daily Volume: 600 thousand

Encore Acquisition - EAC - close: 35.80 change: +0.72 stop: 33.49

Company Description:
Organized in 1998, Encore is a growing independent energy company engaged in the acquisition, development and exploitation of North American oil and natural gas reserves. Encore's oil and natural gas reserves are in four core areas: the Cedar Creek Anticline of Montana and North Dakota; the Permian Basin of West Texas and Southeastern New Mexico; the Mid Continent area, which includes the Arkoma and Anadarko Basins of Oklahoma, the North Louisiana Salt Basin, the East Texas Basin and the Barnett Shale near Fort Worth, Texas; and the Rocky Mountains. (source: company press release)

Why We Like It:
Energy stocks are once again out performing the markets and with crude oil poised to breakout over $50 a barrel we would easily see another leg higher for the energy sector. EAC has been churning sideways in a bullish consolidation pattern with rising lows against resistance at the $35.50 level. The stock broke out above this level today but we want to see some confirmation. If EAC can trade above $36.00 again it will produce a new triple-top breakout buy signal on its P&F chart. We will use a TRIGGER at $36.10 to open the play. Our short-term target will be the $40.00 region. We need to be out of this play before EAC's earnings report due out some time around February 15th.


Picked on January xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 02/15/05 (unconfirmed)
Average Daily Volume: 173 thousand

Frontier Oil - FTO - close: 27.00 change: +0.74 stop: 25.99

Company Description:
Frontier operates a 110,000 barrel-per-day refinery located in El Dorado, Kansas, and a 46,000 barrel-per-day refinery located in Cheyenne, Wyoming, and markets its refined products principally along the eastern slope of the Rocky Mountains and in other neighboring plains states. (source: company press release)

Why We Like It:
FTO is another play on the strength in the oil sector. Shares have been consolidating under resistance at the $27.00 level since late November. Now after several days of churning between $26.00 and $27.00 the stock looks poised to breakout to new all-time highs. We want to use a TRIGGER at $27.05 to catch the breakout and target a run toward the $30.00 region. We need to be out of the play before FTO's earnings on February 17th.


Picked on January xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 02/17/05 (unconfirmed)
Average Daily Volume: 212 thousand

New Short Plays

Kohl's - KSS - close: 45.53 change: -0.53 stop: 47.01

Company Description:
Based in Menomonee Falls, Wis., Kohl's is a family-focused, value-oriented specialty department store offering moderately priced national brand apparel, shoes, accessories and home products. The company operates 637 stores in 40 states. (source: company press release)

Why We Like It:
Last year there was plenty of speculation that KSS could have a great year in 2005. There was plenty of talk about how the company would have easy year-over-year comparisons because late 2003 and early 2004 were so bad. Investors were betting that KSS would out perform in 2005 as it turned in strong earnings growth. Those expectations appear to be dashed as the company issued an earnings warning on January 6th. The lack of participation in the recent market bounce doesn't bode well and the stock is nearing support at a trendline dating back to April (see chart). We want to catch any breakdown under this trendline and round-number support at the $45 level. Our plan is to use a TRIGGER at $44.49 and target a move toward $41-40. The P&F chart already displays a sell signal with a $38 target.


 

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