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New Plays
Long Plays
Short Plays
SLE AGO
  DHI

New Long Plays

Sara Lee - SLE - close: 20.37 chg: -0.50 stop: 19.74

Company Description:
Sara Lee Corporation (www.saralee.com) is a global manufacturer and marketer of high-quality, brand-name products for consumers throughout the world. With headquarters in Chicago, Sara Lee has operations in 58 countries and markets products in nearly 200 nations. (source: company press release or website)

Why We Like It:
After five weeks of consolidating between $19 and $20 it looks like SLE has built a new bottom or base to spring higher from. Shares managed to surge higher on Thursday and breakout over resistance at the $20.00 level despite an earnings warning over future quarters. It's possible that the breakout was merely short-covering on the earnings news. That's why we are suggesting a trigger to go long at $20.75, which is above Friday's high. If SLE can hit our trigger it would suggest the new trend is higher considering that Friday was an "inside day". Our short-term target will be the simple 200-dma near $22.00.

Picked on August xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 08/04/05 (confirmed)
Average Daily Volume: 2.7 million
 

New Short Plays

Assured Guaranty - AGO - close: 22.73 chg: -0.84 stop: 24.05

Company Description:
Assured Guaranty Ltd. is a Bermuda-based holding company. Its operating subsidiaries provide credit enhancement products to the U.S. and international public finance, structured finance and mortgage markets. (source: company press release or website)

Why We Like It:
AGO turned in a very impressive quarter by smashing analysts' earnings estimates for the company. Unfortunately, investors sold the news and shares lost 3.5% on big volume. Friday's action painted a bearish engulfing candlestick, which is normally seen as a one-day bearish reversal pattern. Before we suggest shorts on the stock AGO needs to confirm the reversal pattern. That's why we are suggesting a trigger to short AGO at $22.39. More conservative traders may want to wait for AGO to trade under $22.00 first. Our target is the $20.50-20.00 range, since the $20.00 level should be support.

Picked on August xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 08/04/05 (confirmed)
Average Daily Volume: 229 thousand

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D.R.Horton - DHI - close: 38.45 change: -2.00 stop: 40.51

Company Description:
D.R. Horton, Inc., America's Builder, is the largest homebuilder in the United States, delivering more than 43,000 homes in its fiscal year ended September 30, 2004. Founded in 1978 in Fort Worth, Texas, D.R. Horton has expanded its presence to include 71 markets in 23 states in the Midwest, Mid- Atlantic, Southeast, Southwest and Western regions of the United States. The Company is engaged in the construction and sale of high quality homes with sales prices ranging from $80,000 to over $900,000. D.R. Horton also provides mortgage financing and title services for homebuyers through its mortgage and title subsidiaries. (source: company press release or website)

Why We Like It:
Homebuilders were hit hard by profit taking on Friday after investors were spooked that the strong jobs data would push the FOMC to raise interest rates beyond where Wall Street expects them. Higher rates impact mortgages and that impacts consumers abilities to buy houses. The homebuilders are already overbought and extended so the group is overdue for some profit taking. Friday's decline in DHI under short-term support at the $40.00 level looks like an entry point for the bears. We are going to target the $35.00-34.50 range, which looks like support. While we are suggesting new entries at current levels many of our readers may want to wait a day or two just to see if DHI bounces. Friday's trading did see DHI bounce from near its simple 50-dma. We would not be surprised at all to see DHI bounce into the $39.50-40.00 region before moving lower. The $40.00 mark, which was support, should now act as resistance.

Picked on August 07 at $38.45
Change since picked: - 0.00
Earnings Date 07/21/05 (confirmed)
Average Daily Volume: 2.9 million
 

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