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PDCO MENT

New Long Plays

Patterson Companies - PDCO - close: 40.85 chg: +1.38 stop: 38.99

Company Description:
Patterson Companies, Inc. is a value-added distributor serving the dental, companion-pet veterinarian and rehabilitation supply markets. We recently changed our name from Patterson Dental Company to reflect our expanding base of business, which now encompasses the veterinary and rehabilitation supply markets, as well as our traditional base of operations in the dental supply market. (source: company press release or website)

Why We Like It:
Market strength and a nice rally in shares of PDCO pushed the stock above recent resistance in the $40.50 region. The stock has been struggling with a bearish channel for the last few months but it appears that PDCO has established a new base of support at $38.00. Furthermore the stock has broken out through the top of its descending channel and technical resistance at its simple 50-dma. The P&F chart is still bearish but that doesn't mean that the stock can't rally back toward the $44.00-45.00 range, which we'll use as our target. We would suggest new longs with PDCO above the $40.00 mark. More patient traders might wait for a dip back toward $40.50-40.25 and buy the dip or bounce there. We will plan to exit before the company announces earnings in late November.

Picked on October 30 at $40.85
Change since picked: + 0.00
Earnings Date 11/24/05 (unconfirmed)
Average Daily Volume: 1.2 million
 

New Short Plays

Mentor Graphics - MENT - close: 8.04 chg: +0.04 stop: 8.36

Company Description:
Mentor Graphics Corporation is a world leader in electronic hardware and software design solutions, providing products, consulting services and award-winning support for the world's most successful electronics and semiconductor companies. Established in 1981, the company reported revenues over the last 12 months of about $700 million and employs approximately 3,900 people worldwide. (source: company press release or website)

Why We Like It:
MENT has been stuck in a trading range between $7.85 and $9.00 for three months. Even the company's earnings report could not produce enough fuel for the stock to breakout. The lack of participation in the rally on Friday suggests that MENT may be poised to turn lower. Earnings were on October 20th and MENT beat estimates but issued an earnings warning for the fourth quarter. The P&F chart points to a $2.50 target. We are going to suggest a trigger to short the stock at $7.80. If triggered we'll target a decline to the $6.55 mark.

Picked on October xx at $xx.xx <-- see Trigger
Change since picked: + 0.00
Earnings Date 10/20/05 (confirmed)
Average Daily Volume: 713 thousand
 

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