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  YUM

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New Short Plays

Fincl. Sel. SPDR - XLF - close: 29.71 chg: -0.25 stop: 30.01

Company Description:
The XLF is a SPDR ("spider") trust fund designed to track the performance of the financial sector.

Why We Like It:
The early September, post-Katrina rally is stalling and we suspect that the markets are poised to move back into its seasonal trends with September as the weakest month of the year for equities. Helping lead the way are some weak banking sector indices. Both the BKX and BIX are turning lower after testing resistance at the top of their descending channels. Instead of trying to pick just one banking stock to play we're choosing to short the XLF spiders. Looking at the daily chart you can see that the group has been struggling under resistance at the $30.00 level for the last several weeks. If you view the weekly chart you'll notice a strong bearish divergence in its weekly MACD indicator. We believe that today's performance in the XLF was a bearish failed rally and this offers a new entry point to short the XLF with minimum risk using a tight stop over resistance at $30.01. Our six-week target is the $28.50 level.

Picked on September 13 at $29.71
Change since picked: + 0.00
Earnings Date 00/00/00 (unconfirmed)
Average Daily Volume: 5.8 million

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YUM Brands - YUM - close: 49.98 change: -0.69 stop: 51.01

Company Description:
Yum! Brands Inc., based in Louisville, Kentucky, is the world's largest restaurant company in terms of system restaurants with nearly 34,000 restaurants in more than 100 countries and territories. Four of the company's restaurant brands -- KFC, Pizza Hut, Taco Bell and Long John Silver's -- are the global leaders of the chicken, pizza, Mexican-style food and quick-service seafood categories respectively. Yum! Brands is the worldwide leader in multibranding, which offers consumers more choice and convenience at one restaurant location from a combination of KFC, Taco Bell, Pizza Hut, A&W or Long John Silver's brands. The company and its franchisees today operate over 2,900 multibrand restaurants. Outside the United States in 2004, the Yum! Brands' system opened about three new restaurants each day of the year, making it one of the fastest growing retailers in the world. (source: company press release or website)

Why We Like It:
A few days ago shares of YUM produced a nice pop higher following a bullish upgrade. Unfortunately for shareholders the rally is already stalling under its trendline of lower highs. We see the failed rally as a new low-risk entry point to short the stock and scalp a couple of points as YUM fills the gap. This should be a relatively quick play as we target a move back to the $48.00 level.

Picked on September 13 at $49.98
Change since picked: + 0.00
Earnings Date 10/12/05 (unconfirmed)
Average Daily Volume: 1.2 million
 

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