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New Long Plays

Agilysys - AGYS - close: 18.30 chg: +1.10 stop: 16.99

Company Description:
Agilysys, Inc. is one of the foremost distributors and premier resellers of enterprise computer technology solutions. It has a proven track record of delivering complex servers, software, storage and services to resellers and corporate customers across a diverse set of industries. In addition, the company provides customer-centric software applications and services focused on the retail and hospitality markets. Headquartered in Cleveland, Agilysys has sales offices throughout the United States and Canada. (source: company press release)

Why We Like It:
Tech stocks have been under performing the rest of the market lately but it looks like AGYS is poised to ignore its peers and begin its next leg higher. Shares have spent the last five months consolidating sideways in a range between $15.00 and $18.00. Today shares added 6.3 percent on volume about twice the average to breakout through the top of its range and close at a new all-time high. The technical breakout over resistance and the big volume surge is a classic bullish entry point. Plus AGYS's point-and-figure chart shows a fresh triple-top breakout buy signal with a $32 target. We want to go long at current levels or anywhere above the $18.00 mark and target a move to $20-21. Conservative traders may want to wait for confirmation (a.k.a. follow through) on today's move.


Picked on February 16 at $18.39
Change since picked: + 0.91
Earnings Date 02/09/05 (confirmed)
Average Daily Volume: 197 thousand


Tesoro Corp - TSO - close: 34.65 chg: +1.87 stop: 32.00

Company Description:
Tesoro Corporation, a Fortune 500 Company, is an independent refiner and marketer of petroleum products. Tesoro operates six refineries in the Western United States with a combined capacity of nearly 560,000 barrels per day. Tesoro's retail-marketing system includes over 500 branded retail stations, of which more than 200 are company operated under the Tesoro. and Mirastar. brands. (source: company press release)

Why We Like It:
It seems like the oil sector is the only group really showing any strength lately. Of course if you look at the OIX and OSX indices you'll see that they have become short-term overbought and they're both due for a pull back. One stock in the group that doesn't look so overbought is TSO. You could argue that TSO is lagging the group but the stock has been a huge winner over the 18 months or so. However, if you look at the daily chart you'll see that TSO has been consolidating its gains under resistance at $35.00 for the last five months. The current rally attempt is nearing resistance and TSO looks poised for a breakout. We want to use a TRIGGER to catch a breakout over the $35.00 level. If triggered TSO could race higher in an attempt to catch up with some of its peers. Our entry point will be 35.15. We'll use a wide stop initially just in case the sector does see some profit taking. Our initial target is the $39.50-40.00 range. Our time frame is six to eight weeks. If you check the P&F chart you'll see that TSO is in a buy signal with a $59 target.


Picked on February xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 02/03/05 (confirmed)
Average Daily Volume: 1.0 million

New Short Plays

IAC/InterActiveCorp - IACI - close: 22.55 chg: -1.45 stop: 24.51

Company Description:
IAC operates leading and diversified businesses in sectors being transformed by the internet, online and offline ... our mission is to harness the power of interactivity to make daily life easier and more productive for people all over the world. (source: company press release)

Why We Like It:
IACI reported earnings this morning that beat Wall Street's estimates but analysts and investors were not happy with what they found in the details or on the conference call. The stock produced a bearish engulfing candlestick pattern on volume about three times the average. Today's drop also broke through the bottom of its recent trading range helping push the MACD to a new sell signal. We normally don't like to chase a move this big but IACI has been trending lower for the last 18 months with a series of lower highs. If you check the weekly chart you'll actually see what closely resembles a wide, descending channel and IACI just failed near the top of the channel. Checking the P&F chart will reveal a bearish pattern with a $4.00 price target. No one can argue that the prevailing trend is down but we want to protect ourselves and use a trigger to open the play. Currently IACI is close to filling the gap higher from November and the top and bottom of a gap tend to act as support or resistance. Our plan is to short the stock on a breakdown below $22.00 (bottom of the gap). We'll target a drop into the $19.00-20.00 range. The November low was $19.16 but the $20.00 level would be seen as round-number support. We are using a very wide stop to begin this play making this an aggressive or higher-risk endeavor. Truthfully if IACI trades back above the $23 level after being triggered we may make for an early exit. Our entry point will be $21.95. Another risk to consider is IACI's relatively high short interest at more than 22 percent of the float. That makes the stock a risk should there be any spikes higher that could spook weak-handed shorts into covering.


Picked on February xx at $xx.xx <-- see TRIGGER
Change since picked: - 0.00
Earnings Date 02/16/05 (unconfirmed)
Average Daily Volume: 4.4 million

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