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New Short Plays

Ebay Inc. - EBAY - close: 39.53 change: -0.96 stop: 42.01

Company Description:
eBay is The World's Online Marketplace, enabling trade on a local, national and international basis. With a diverse and passionate community of individuals and small businesses, eBay offers an online platform where millions of items are traded each day. Ebay includes Half.com, Shopping.com, Rent.com, PayPal, and now Skype. (source: company press release or website)

Why We Like It:
Most of the major Internet companies have not been doing very well. EBAY ranks right up there with its compatriots. The stock reversed course after a failed rally at $48 after its earnings report in January. It is arguable that EBAY is looking a bit oversold and due for a bounce. However, we like today's failed rally and see it as a new entry point to short the stock. It looks more attractive if you consider that EBAY has broken down below nine-month old support (see chart). We are going to put our stop loss at $42.01 since $42.00 used to be old support. More conservative traders may want to put their stop loss above today's high (41.18) or above the 10-dma. Our initial target will be the $35.75-36.00 range. The P&F chart is bearish and points to a $32 target.

Picked on February 09 at $39.53
Change since picked: + 0.00
Earnings Date 01/18/06 (confirmed)
Average Daily Volume: 13.9 million


Oregon Steel - OS - close: 36.99 change: -0.89 stop: 40.01

Company Description:
Oregon Steel Mills, Inc. is one of the most diversified minimills in the U. S., producing a broad line of specialty and commodity steel products for domestic and global markets. The Company's strategy is to focus on value-added products and flexible manufacturing facilities which are responsive to changes in market conditions. The Company is organized into two divisions - the Oregon Steel Division and Rocky Mountain Steel Mills Division. (source: company press release or website)

Why We Like It:
The upward momentum in the steel industry has stalled and many of the major players are reversing after a very solid run up in January. OS is one of them. The MACD, RSI and stochastics on the daily chart are all bearish and now some of the weekly indicators are turning south. We see today's failed rally as a new entry point to short the stock. Our target is going to be the simple 50-dma, currently at 32.76. However since the 50-dma is rising we'll use an exit range or target in the 33.50-32.75 zone. More conservative traders may want to consider putting their stop loss just above today's high (39.24). Please note that this is a slightly more aggressive play. The most recent data put short interest at 14.5% of the 35.5 million shares in the float. If you're not interested in trading OS then check out ATI, which is another steel stock offering a similar pattern and potential entry point for shorts.

Picked on February 09 at $36.99
Change since picked: + 0.00
Earnings Date 03/01/06 (confirmed)
Average Daily Volume: 870 thousand

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