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LEA MRCY

New Long Plays

Lear Corp. - LEA - close: 29.25 change: -0.48 stop: 27.99

Company Description:
Lear Corporation is one of the world's largest suppliers of automotive interior components and systems. Lear provides complete automotive seating systems and electrical & electronics systems as well as interior trim products. With annual net sales of $17 billion in 2004, Lear ranks #127 among the Fortune 500. The company's world-class products are designed, engineered and manufactured by a diverse team of more than 110,000 employees in 34 countries. (source: company press release or website)

Why We Like It:
The multi-month bearish trend in the major U.S. carmakers and some of the parts suppliers may be ending - at least short-term. The group has been strongly lately after the recent December vehicle sales data, while bad, was not worse than expected. The downward momentum in LEA actually stalled a few weeks ago and the stock has been building a sideways base in the $27.00-29.00 region. Wednesday's bullish breakout over the 50-dma looked like a buy signal although the shares failed to push past the $30 level today the pull back stalled near $29.00, which as broken resistance should act as new support. We want to buy a bounce from $29.00. More conservative traders may want to wait for LEA to trade over today's high at $30.13 before going long. We're going to set our stop loss at $27.99. We are looking for a quick move into the $32.40-33.00 range before its January 25th earnings report. We do not want to hold over the report.

Picked on January 05 at $29.25
Change since picked: + 0.00
Earnings Date 01/25/06 (unconfirmed)
Average Daily Volume: 1.8 million
 

New Short Plays

Mercury Computer - MRCY - close: 19.34 change: -0.72 stop: 20.51

Company Description:
Mercury Computer Systems, Inc. is the leading provider of high-performance embedded, real-time digital signal and image processing solutions. Mercury's solutions play a critical role in a wide range of applications, transforming sensor data to information for analysis and interpretation. In military reconnaissance and surveillance platforms the Company's systems process real-time radar, sonar, and signals intelligence data. Mercury's systems are also used in state-of-the-art medical diagnostic imaging devices including MRI, PET, and digital X-ray, and in semiconductor imaging applications including photomask generation and wafer inspection. Mercury provides advanced 3D image processing and visualization software and optimized systems to diverse end markets including life sciences, geosciences, and simulation. The Company also provides radio frequency (RF) products for enhanced communications capabilities in military and commercial applications. (source: company press release or website)

Why We Like It:
Technology stocks, especially hardware, have been strongly lately. That's why MRCY's relative weakness makes it so tempting as a short candidate. The stock gapped down back in October after issuing an earnings warning for fiscal year 2006. The oversold bounce took a couple of months but now MRCY is turning lower again. The stock's decline today (-3.5%) broke down below round-number, psychological support at the $20.00 level, technical support at the 50-dma, and MRCY's two-month trend of higher lows. Volume came in above average on the decline. We are going to target a drop into the $17.70-17.50 range by its January earnings report. We do not want to hold over the report.

Picked on January 05 at $19.34
Change since picked: + 0.00
Earnings Date 01/26/06 (unconfirmed)
Average Daily Volume: 296 thousand
 

In Play Updates and Reviews

Long Play Updates

Builders FirstSource - BLDR - close: 21.78 chg: -0.15 stop: 20.25

It was almost as if trading in BLDR disappeared. Volume was extremely low today and shares traded in a narrow range. Everyone must be waiting for the jobs report tomorrow morning. If BLDR dips we'd watch the $21 level for the first line of support. Our target is the $23.50-24.00 range. We do not want to hold over the earnings report even if we think it will be positive.

Picked on January 03 at $21.75
Change since picked: + 0.03
Earnings Date 01/26/06 (unconfirmed)
Average Daily Volume: 205 thousand

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Duke Energy - DUK - close: 27.61 change: -0.20 stop: 26.89

Energy stocks, including utilities, turned lower today. DUK lost 0.7% but did not break its short-term trend of higher lows. We are not suggesting new positions. Our target is the $27.95-28.00 range near its 200-dma.

Picked on December 13 at $26.89
Change since picked: + 0.72
Earnings Date 02/01/06 (unconfirmed)
Average Daily Volume: 3.9 million

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LifeCell Corp. - LIFC - close: 19.58 change: +0.63 stop: 19.24

The stock got a lift today after an analyst firm started coverage with a "buy" rating this morning. We do not see any change from our weekend update on LIFC. Our trigger to go long the stock is at $20.65. If triggered we'll target a rally into the $24-25 range. The P&F chart is still bullish with a $29 target. We do not want to hold over the late January earnings report.

Picked on December xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 01/25/06 (unconfirmed)
Average Daily Volume: 598 thousand

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Norfolk So. Corp. - NSC - close: 42.85 chg: -0.70 stop: 42.49

Heads up! Conservative traders may want to abandon ship right here. The transports were weak today and NSC lost 1.6% to close right on its 50-dma. Volume has been pretty heavy during the three-day decline. We are not suggesting new long positions here. We do not want to hold over the late January earnings report.

Picked on December 22 at $44.35
Change since picked: - 1.50
Earnings Date 01/25/06 (unconfirmed)
Average Daily Volume: 2.2 million

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VCA Antech - WOOF - close: 29.14 chg: +0.22 stop: 27.45

WOOF hit another new high today. We will plan to exit ahead of the late January earnings report. Our target is the $29.90-30.00 range.

Picked on November 09 at $26.74
Change since picked: + 2.40
Earnings Date 01/24/06 (unconfirmed)
Average Daily Volume: 436 thousand
 

Short Play Updates

GMX Resources - GMXR - close: 36.07 chg: -1.81 stop: 38.51

Weakness in the energy stocks hit GMXR hard today with a 4.7% decline. Traders might want to initiate new shorts if GMXR trades under today's low at $35.64. More conservative traders may want to wait for a new decline under $35.00 before initiating positions. Our target will be the $30.50-30.00 range. We do not want to hold over the late January earnings report.

Picked on January 01 at $36.00
Change since picked: + 0.07
Earnings Date 01/29/06 (unconfirmed)
Average Daily Volume: 256 thousand

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Network Appliance - NTAP - cls: 28.21 chg: +0.15 stop: 28.55

Tech stocks were the market leaders today and NTAP inched higher again but the "rally" couldn't push past the 50-dma - at least during the regular session. After hours Xyratex (XRTX) reported a strong Q4 earnings result and shares of NTAP were trading higher after hours. It would not take much for NTAP to hit our stop loss at $28.55 tomorrow.

Picked on December 28 at $27.70
Change since picked: + 0.51
Earnings Date 02/15/06 (unconfirmed)
Average Daily Volume: 4.3 million

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Somanetics - SMTS - close: 29.75 change: -0.18 stop: 33.05

We are not suggesting new positions at this time. More conservative traders may want to exit right here. Our target is the $27.50-27.00 range.

Picked on December 29 at $32.45
Change since picked: - 2.70
Earnings Date 01/11/06 (unconfirmed)
Average Daily Volume: 158 thousand

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Waters Corp. - WAT - close: 37.26 chg: -0.57 stop: 39.25

WAT is hitting new relative lows and this looks like a new bearish entry point. However, traders might want to wait on starting new plays until after we see how the market reacts to the jobs report tomorrow morning. Our target is the $35.25-35.00 range. WAT's P&F chart points to a $25 target. We do not want to hold over the late January earnings report.

Picked on December 18 at $38.60
Change since picked: - 1.34
Earnings Date 01/24/06 (unconfirmed)
Average Daily Volume: 901 thousand
 

Closed Long Plays

Outback Steakhouse - OSI - close: 40.50 chg: -1.49 stop: 40.49

We have been stopped out. Investors reacted negatively to OSI's same-store sales numbers for December. The company said that same store sales for the Outback restaurants had fallen 1.2% compared to a 5.2% gain in its Carrabba's chain. Our stop loss was $40.49 and OSI hit 40.44 today.

Picked on December 23 at $41.55
Change since picked: - 1.05
Earnings Date 02/09/06 (unconfirmed)
Average Daily Volume: 789 thousand
 

Closed Short Plays

NeuroMetrix - NURO - close: 31.29 chg: +1.19 stop: 31.05

The rebound in NURO continued into Thursday and the stock broke out over its 100-dma and hit our stop loss at $31.05.

Picked on December 06 at $29.59
Change since picked: + 1.70
Earnings Date 01/27/06 (unconfirmed)
Average Daily Volume: 210 thousand
 

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