Option Investor
New Plays
HAVING TROUBLE PRINTING?
Printer friendly version
New Plays
Long Plays
Short Plays
MOT LIZ
  MYL

New Long Plays

Motorola - MOT - close: 16.21 change: +0.39 stop: 15.45

Company Description:
Motorola is a Fortune 100 global communications leader that provides seamless mobility products and solutions across broadband, embedded systems and wireless networks. In your home, auto, workplace, and all spaces in between, seamless mobility means you can reach the people, things and information you need, anywhere, anytime. Seamless mobility harnesses the power of technology convergence and enables smarter, faster, cost-effective and flexible communication. Motorola had sales of US $31.3 billion in 2004. (source: company press release)

Why We Like It:
MOT seems to be getting a lot of positive press lately but that's not why we like it. We like the bullish breakout over its five-month trend of lower highs. The action over the past couple of weeks looks like a trend reversal higher. It is true that MOT's P&F chart is still bearish and that makes this a play a little more higher-risk. Another factor to consider is the NASDAQ is still trading underneath resistance at the 2000 level. A breakout in the NASDAQ would go a long way to clearing the road ahead for MOT. Of course if the NASDAQ reverses under the 2000 level then traders probably don't want to be long a communication equipment stock like MOT. Keep that in mind when you plan your trades for next week. On the bullish side shares of MOT did breakout over resistance at the $16.00 level on volume about double the norm, which suggests more strength ahead. We're going to try and keep our risk to a minimum with a relatively tight stop at $15.45. Our six-week target is the $17.45-18.00 range.

Picked on May 15 at $16.21
Change since picked: + 0.00
Earnings Date 04/20/05 (confirmed)
Average Daily Volume: 13.2 million
 

New Short Plays

Liz Claiborne - LIZ - close: 37.14 change: -0.27 stop: 38.25

Company Description:
Liz Claiborne Inc. designs and markets an extensive range of fashion apparel and accessories for women, men, teens, children and infants. The Company also markets fragrances for women and men. The brands in the Liz Claiborne Inc. portfolio are available at over 30,000 points of sale worldwide. (source: company press release)

Why We Like It:
The bearish Wal-mart (WMT) earnings news this past week was a major blow to investor confidence across the market and especially in the retail sector. Now that the DJIA and the S&P 500 have confirmed that they remain mired in their three-month bearish trend we suspect that LIZ will also begin its next leg down in its own bearish trend. Shares of LIZ peaked back in early March with a volatile spike higher and equally volatile bearish reversal. Since then LIZ has been channeling lower. We believe that the recent oversold bounce back to the top of its channel is beginning to fail and thus creates an attractive spot to short the stock. We'll use a stop loss above the recent high and the top of its channel. Our target is the late April lows. We'll use $34.35-34.00 as the exit range. More conservative traders may want to use an entry point in the $36.75-36.60 range to confirm the new leg lower.

Picked on May 15 at $37.14
Change since picked: - 0.00
Earnings Date 04/28/05 (confirmed)
Average Daily Volume: 718 thousand

---

Mylan Labs - MYL - close: 16.01 change: -0.06 stop: 16.51

Company Description:
Mylan Laboratories Inc. is a leading pharmaceutical company with four subsidiaries, Mylan Pharmaceuticals Inc., Mylan Technologies Inc., UDL Laboratories, Inc. and Mylan Bertek Pharmaceuticals Inc., that develop, manufacture and market an extensive line of generic and proprietary products. (source: company press release)

Why We Like It:
MYL is a momentum play, pure and simple. The stock has slowly been sinking for weeks and shares just recently broke down below nine-month trendline of potential support. The biggest challenge here is probably going to be one of patience as MYL doesn't move very fast. Fortunately the P&F chart really confirms the bearish direction with a sell signal pointing to a $2.00 target. The bad news is that MYL is very short-term oversold and due for a bounce. The stock is also falling into an area that could have a few very long-term trendlines of support depending on which lows over the last few years you want to use to begin drawing from. We're going to count on the "trend" being our "friend" here. However, to protect ourselves we want to use a trigger at $15.85 to open the play and confirm the breakdown under $16.00 and its trendline (see chart below). Plus, we'll use a stop loss at $16.51. If you prefer to short a failed rally then look for a possible bounce back toward the $16.25 level, which should be short-term overhead resistance. Another thought to keep in mind is the ASCO conference that begins this weekend. There could be news out on Monday that will influence the biotech/drug stocks. Conservative traders may want to step back until later in the week before considering positions in MYL. Our eight-to-ten week target is the $14.85-14.75 range.

Picked on May xx at $xx.xx <-- see TRIGGER
Change since picked: - 0.00
Earnings Date 05/12/05 (confirmed)
Average Daily Volume: 1.6 million
 

Premier Investor New Play Archives