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New Plays
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AGII CAL
GEG  

New Long Plays

Argonaut Group - AGII - close: 35.20 chg: +0.57 stop: 33.80

Company Description:
Headquartered in San Antonio, Argonaut Group, Inc. is a national underwriter of specialty insurance products in niche areas of the property and casualty market, with approximately $3.4 billion in assets. Through its insurance subsidiaries, Argonaut Group offers a full line of high quality products and services designed to meet the unique coverage and claims handling needs of businesses in three primary segments: Excess and Surplus Lines, Select Markets, and Public Entity. Members of Argonaut Group include Colony Group, Argonaut Specialty, Rockwood Casualty, Great Central, Grocers Insurance, Trident Insurance Services, and Argonaut Insurance Company. (source: company press release or website)

Why We Like It:
We like AGII for its consistent upward momentum. The stock has been climbing for months and recently bounced from its rising trendline of support. The company is due to report earnings in about a week so we're going to jump on and see if there is any pre-earnings run up. We'll plan to exit on Monday, February 6th to avoid holding over its earnings report. We are suggesting longs here over $35.00. Our stop loss will be $33.80. Our short-term target is 38.00-38.50.

Picked on January 29 at $35.20
Change since picked: + 0.00
Earnings Date 02/07/06 (confirmed)
Average Daily Volume: 189 thousand

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Global Power Equip. - GEG - close: 4.65 chg: +0.35 stop: 4.09

Company Description:
Oklahoma based Global Power Equipment Group Inc. is a leading design, engineering and manufacturing firm providing a broad array of equipment and services to the global energy, power infrastructure and process industries. The Company designs, engineers and manufactures a comprehensive portfolio of equipment for gas turbine power plants and power-related equipment for industrial operations, and has over 30 years of power generation industry experience. The Company's equipment is installed in power plants and in industrial operations in more than 40 countries on six continents and believes, in its product lines, it has one of the largest installed bases of equipment for power generation in the world. In addition, the Company provides its customers with value-added services including engineering, retrofit, maintenance, repair and general plant services. (source: company press release or website)

Why We Like It:
We normally don't like to chase a move this big (+8% on Friday) but we suspect this is the beginning of a short squeeze. The stock has been basing sideways for weeks but with a very specific trendline of resistance (see chart). On Friday GEG pushed through this level of resistance and the stock just soared. Volume on Friday's gain was almost four times the daily average. Short-interest has risen to 4.8 million shares or 10.5% of the float. We consider this an aggressive, higher-risk play because we're chasing a relatively big move and our stop loss is relatively wide. We will target the simple 100-dma currently at 5.57 so we'll use a target zone of $5.40-5.60.

Picked on January 29 at $ 4.65
Change since picked: + 0.00
Earnings Date 03/13/06 (unconfirmed)
Average Daily Volume: 334 thousand
 

New Short Plays

Continental Air. - CAL - close: 18.49 change: -0.84 stop: 19.55

Company Description:
Continental Airlines is the world's sixth-largest airline. Continental, together with Continental Express and Continental Connection, has more than 3,100 daily departures throughout the Americas, Europe and Asia, serving 151 domestic and 133 international destinations, more than any other carrier in the world. More than 400 additional points are served via SkyTeam alliance airlines, which include Aeromexico, Air France, Alitalia, CSA Czech Airlines, Delta Air Lines, KLM, Korean Air and Northwest Airlines. With more than 42,000 employees, Continental has hubs serving New York, Houston, Cleveland and Guam, and together with Continental Express, carries approximately 61 million passengers per year. (source: company press release or website)

Why We Like It:
In spite of a much better than expected earnings report a couple of weeks ago shares of CAL continue to look bearish. The stock, and the airline group, produced a very strong run from September through early January and then quickly broke down from its bullish trend. In the last several days we've seen CAL produce an oversold bounce but this has failed under the $20.00 level, actually under $19.50. Short-term technical oscillators are turning bearish again and this looks like an entry point to short the stock with shares under the simple 50-dma. We will target a decline into the $16.25-16.00 range. Keep in mind that threats from Iran and problems in Nigeria are pushing oil prices higher. This impacts the cost of jet fuel, which is a serious expense for the airlines. The sector could be weak for the foreseeable

Picked on January 29 at $18.49
Change since picked: + 0.00
Earnings Date 04/18/06 (unconfirmed)
Average Daily Volume: 3.3 million
 

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