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SFD None

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Smithfield Foods - SFD - close: 27.61 change: +1.09 stop: 26.35

Company Description:
Smithfield Foods has delivered a 26 percent average annual compounded rate of return to investors since 1975. With sales of $11 billion, Smithfield is the leading processor and marketer of fresh pork and processed meats in the United States, as well as the largest producer of hogs. (source: company press release or website)

Why We Like It:
We normally try to avoid playing the post-earnings reaction but the technical developments in SFD make it too tempting to pass up. The company reported earnings this morning that were down from a year ago but inline with analysts' expectations. The stock rallied higher on positive comments for the current quarter and looking ahead to 2006. We like today's breakout because it breaks the six-month trendline of lower highs (see chart). Plus, it's a rebound off its longer-term rising trendline of support on its weekly chart (see below). While we will suggest new plays here near $27.50 more patient traders might want to wait for a possible pull back tomorrow toward the $27.00 level and its simple 50-dma, which should now act as support. Our target is going to be the simple 200-dma in the $29.25-29.50 range.

Annotated chart:

Picked on August 25 at $27.61
Change since picked: + 0.00
Earnings Date 08/25/05 (confirmed)
Average Daily Volume: 825 thousand
 

New Short Plays

None today.
 

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