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  SMTS

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New Short Plays

Network Appliance - NTAP - cls: 27.70 chg: -0.14 stop: 29.05

Company Description:
Network Appliance is a world leader in unified storage solutions for today's data-intensive enterprise. Since its inception in 1992, Network Appliance has delivered technology, product, and partner firsts that simplify data management. (source: company press release or website)

Why We Like It:
The rally from NTAP's lows this past fall has died. The stock just couldn't muster up enough momentum to push through resistance near $30.00. Now shares are breaking down below multiple levels of support. The P&F chart points to a $17.00 target. The last three days have offered new entry points to short the stock under its simple 50-dma. We are going to suggest shorts here with NTAP under the $28 level. More conservative traders may want to wait for a decline under $27.50 or under Friday's low near 27.37. Our target is the $25.25-25.00 range since NTAP appears to have long-term support near the $25 region. We do expect a bounce from the $27 level near its 200-dma.

Picked on December 28 at $27.70
Change since picked: + 0.00
Earnings Date 02/15/06 (unconfirmed)
Average Daily Volume: 4.3 million

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Somanetics - SMTS - close: 33.05 change: -2.60 stop: 35.05

Company Description:
Somanetics develops and markets the INVOS Cerebral Oximeter, which, since 1996, has occupied a unique position in U.S. hospitals as the only commercially available monitoring system that noninvasively and continuously monitors changes in a patient's regional brain blood oxygen saturation. Use of the INVOS Cerebral Oximeter helps medical professionals, such as surgeons, anesthesiologists, perfusionists and the critical care team, identify regional brain blood oxygen imbalances and take corrective action. Such action can prevent or reduce neurological injuries related to adverse events during surgery or in the critical care unit and reduce the associated cost of care. The device is used in situations where there is a high risk of brain oxygen imbalances, such as adult and pediatric cardiac surgeries, other major surgeries involving elderly patients and some intensive care unit applications. Somanetics also markets the CorRestore System, a cardiac implant used in cardiac repair and reconstruction, including an operation called Surgical Ventricular Restoration, or SVR, a surgical treatment for patients with certain types of severe congestive heart failure. (source: company press release or website)

Why We Like It:
SMTS looks like a bearish candidate. The stock's rally has stalled near the $37.00 level for the past six weeks. The late November sell-off rebounded from its 50-dma and the $30 level only to stall under $37 again. Today the stock lost more than 7% after news surfaced that it could be facing new competition for its device that measures brain oxygen levels. Today's decline put it under the 50-dma and on big volume! Today's move also helps the technicals on both its daily and weekly charts turn more bearish. The daily chart has a new MACD sell signal. We want to see confirmation that the stock's direction has truly turned bearish. Therefore we're suggesting a trigger to short SMTS at $32.45. If triggered we'll target a decline into the $27.50-27.00 range. The biggest challenge and risk here may be the time frame. We do not want to hold over the January 11th (unconfirmed) earnings report. We may have to consider an early exit near the 100-dma (currently near 28.50).

Picked on December xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 01/11/06 (unconfirmed)
Average Daily Volume: 158 thousand

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