Option Investor
New Plays
Printer friendly version
New Plays
Long Plays
Short Plays

New Long Plays

Kerzner Intl - KZL - close: 60.00 chg: +2.00 stop: 57.99

Company Description:
Kerzner International Limited is a leading international developer and operator of destination resorts, casinos and luxury hotels. The Company's flagship brand is Atlantis, which includes Atlantis, Paradise Island, a 2,317-room, ocean-themed destination resort located on Paradise Island, The Bahamas. Atlantis, Paradise Island is a unique destination resort featuring three interconnected hotel towers built around a 7-acre lagoon and a 34-acre marine environment that includes the world's largest open-air marine habitat and is the home to the largest casino in the Caribbean. The Company also developed and receives certain income derived from Mohegan Sun in Uncasville, Connecticut, which has become one of the premier casino destinations in the United States. In the United Kingdom, Kerzner is currently developing a casino in Northampton and received its Certificate of Consent from the U.K. Gaming Board in 2004. In its luxury resort hotel business, the Company manages ten resort hotels primarily under the One&Only brand. The resorts, featuring some of the top-rated properties in the world, are located in The Bahamas, Mexico, Mauritius, the Maldives and Dubai. (source: company press release or website)

Why We Like It:
KZL has been a huge winner for investors back in 2003 and 2004. Yet the stock has spent most of 2005 consolidating those big gains from the previous two years. We suspect that the consolidation is about over. Two days ago the stock produced a small bullish engulfing candlestick above its exponential 200-dma. The candlestick pattern itself wasn't that impressive but volume on the day was very big at over twice the daily average. Today is a follow through on Wednesday's small turnaround. More importantly today's gain is a breakout over technical resistance at its 200-dma, price resistance near $59.00, round-number resistance at the $60.00 mark, more technical resistance at its 100-dma and technical resistance at its six-month trendline of lower highs (see chart). While this looks like a bullish entry point to go long we want to see even more confirmation, especially with the major market averages looking vulnerable to more weakness. Our plan is as follows. We want to use a trigger at $61.01. Our target is the $64.50-65.00 range. What makes this somewhat more risky is that KZL is due to report earnings sometime between August 1st and August 8th and we do not want to hold over the report.

Picked on July xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 08/01/05 (unconfirmed)
Average Daily Volume: 154 thousand

New Short Plays

FirstFed Financial - FED - cls: 62.60 chg: -2.53 stop: 65.05

Company Description:
In 1983 First Federal Bank of California went public. In 1987 First Federal Bank of California organized itself under FirstFed Financial Corp., a holding company. The Company common stock now trades on the New York Stock Exchange under the symbol FED. Today, First Federal Bank of California has 29 banking locations and over $8.4 billion in assets as of March 31, 2005. (source: company press release or website)

Why We Like It:
Wow! If you look at the long-term weekly chart of FED it's pretty impressive. The stock has been a big performer over the past few years. Yet at the moment we suspect the rally has run out of steam. This is an aggressive, high-risk short. Not only are we shorting a stock near its all-time highs but the stock only has a float of about 16 million shares. FED's rally has been struggling with resistance near the $65.00 level for the past ten days and in doing so built a small trading range between $65.00 and 63.25. Today's high-volume reversal is also a breakdown below this short-term trading range. Technical oscillators are naturally overbought and its MACD just produced a new sell signal. We're only looking for a short-term consolidation lower as there are no doubt a crowd of bulls just waiting to buy the dip. Another important element in our strategy is the time frame. FED is due to report earnings next week on July 28th. We do not want to hold over. If FED does not show some follow through on today's sell-off we will quickly bail out to minimize our losses. Our initial target is $58.50.

Picked on July 21 at $62.60
Change since picked: + 0.00
Earnings Date 07/28/05 (confirmed)
Average Daily Volume: 118 thousand


Intl Game Tech. - IGT - cls: 27.21 chg: -1.79 stop: 29.01

Company Description:
International Game Technology is a global company specializing in the design, development, manufacturing, distribution and sales of computerized gaming machines and systems products. (source: company press release or website)

Why We Like It:
IGT reported earnings today and the results were better than expected but that didn't stop investors from "selling the news" anyway. The high-volume sell-off pushed IGT through technical support at its 50 and 100-dma's in addition to price support in the $27.75-28.00 region. It almost looks like a head-and-shoulders pattern on the daily chart. We're going to suggest bearish positions at current levels and we'll target the April lows near $24.00 (24.50-24.00). Traders may want to wait and see if there is an oversold bounce tomorrow and use a failed rally under $28.00 as a more attractive entry point. IGT's P&F chart is bearish and points to a $13 target.

Picked on July 21 at $27.21
Change since picked: + 0.00
Earnings Date 07/21/05 (confirmed)
Average Daily Volume: 2.3 million


Juniper Networks - JNPR - cls: 23.90 chg: -1.10 stop: 25.61

Company Description:
Juniper Networks is the leader in enabling secure and assured communications over a single IP network. The company's purpose-built, high performance IP platforms enable customers to support many different services and applications at scale. Service providers, enterprises, governments and research and education institutions worldwide rely on Juniper Networks to deliver products for building networks that are tailored to the specific needs of their users, services and applications. Juniper Networks' portfolio of proven networking and security solutions supports the complex scale, security and performance requirements of the world's most demanding networks. (source: company press release or website)

Why We Like It:
JNPR is another stock that is suffering despite a positive Q2 earnings report. Results came out on July 19th and investors are "selling the news". Volume has been very high both today and yesterday at more than twice the daily average. Technically JNPR looks pretty negative as well. The stock has broken the neckline of a clear head-and-shoulders pattern that points to a $21 target. Today's decline is also a breakdown under technical support at its simple and exponential 200-dma's. While we are suggesting shorts at current levels some traders may want to wait and see if JNPR produces an oversold bounce soon. A failed rally under $24.50 could be used as a new entry point. We'll set our target in the $21.50-21.00 range. The bearish P&F chart points to a $9.00 target.

Picked on July 21 at $23.90
Change since picked: - 0.00
Earnings Date 07/19/05 (confirmed)
Average Daily Volume: 7.5 million

Premier Investor New Play Archives