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SAFM SCST

New Long Plays

Sanderson Farms - SAFM - close: 24.77 chg: +2.64 stop: 21.99

Company Description:
Sanderson Farms, Inc. is engaged in the production, processing, marketing and distribution of fresh and frozen chicken and other prepared food items. (source: company press release or website)

Why We Like It:
SAFM and the rest of the chicken industry have seen their stocks slowly sink lower for months. Investors have been exiting the sector in anticipation of bird flu hitting the U.S. and in consideration for slower sales overseas. Yet now it appears that SAFM has finally put in a decent bottom or base and the stock is breaking out above resistance. Fueling the big move on Friday were some positive analyst comments for rivals Tyson Foods (TSN) and Pilgrims Pride (PPC). Bird flu is still an issue and is expected to hit the U.S. sometime this year. However, the bad news may finally be priced into the stock or this could just be a long, overdue bounce. SAFM's breakout over resistance at $23.00 and its 50-dma (22.99) was powered by strong volume and looks like a new entry point to go long. More conservative traders may want to wait for a rise through the $25.00 level or look for a dip back toward $23.00-23.50 as a new entry. Our target is the $28.00-30.00 range.

Picked on April 23 at $24.77
Change since picked: + 0.00
Earnings Date 05/23/06 (unconfirmed)
Average Daily Volume: 537 thousand
 

New Short Plays

SCS Transportation - SCST - cls: 27.45 chg: -2.61 stop: 30.01

Company Description:
SCS Transportation, Inc. provides trucking transportation and supply chain solutions to a broad base of customers across the United States. With annual revenue of $1.1 billion, the Company focuses on regional and interregional less-than-truckload (LTL), and selected truckload (TL) and time-definite services. Operating subsidiaries are Saia, a multi-region LTL carrier based in Duluth, Ga., and Jevic, a hybrid LTL and truckload carrier based in Delanco, N.J. Headquartered in Kansas City, Mo., SCST has approximately 9,400 employees nationwide. (source: company press release or website)

Why We Like It:
A disappointing earnings report on Thursday night prompted some serious profit taking in SCST. The stock has been on a six-month bull run and it looks like investors are finally cashing in. Volume on the decline was approaching nine times the daily average and SCST broke support at its simple 50-dma. The weekly chart's MACD has produced a new sell signal. With crude oil prices at new record highs and fuel prices rising at the pump we don't see any reason why investors would be buying SCST right here. If you look at the intraday chart for Friday traders did try and buy the initial gap down but the rally failed under $29.00. We are going to suggest shorts in SCST with the stock under $28.00 although another failed rally near the 50-dma (28.60) could also be used as a new entry point. Our target will be the $25.00-24.00 range. We'll start the play with a wide stop loss at $30.01 but more conservative traders may want to put their stop closer to $29. The more recent data puts short interest at 2.7% of its 14.39 million-share float.

Picked on April 23 at $27.45
Change since picked: + 0.00
Earnings Date 04/20/06 (confirmed)
Average Daily Volume: 166 thousand
 

In Play Updates and Reviews

Long Play Updates

Atlas America - ATLS - close: 51.33 chg: +0.08 stop: 46.99

Friday proved to be a quiet day for ATLS. The stock traded relatively sideways and managed to close with a 1.28% gain. This is a positive show of relative strength since we were expecting a dip back towards the $50.00 level. The dip could still occur and patient traders might just want to wait for a pull back toward the $50 region before considering new bullish plays. Broken resistance at $50.00 should now act as new support. We still believe there is a chance ATLS could see more short covering. The latest data put short interest at 7.3% of ATLS' 16.2 million-share float. Our short-term target for ATLS is the $54.90-55.00 range. More aggressive traders may want to aim higher, especially with the P&F chart pointing to a $73 target. However, we do not want to hold over the early May earnings report.

Picked on April 19 at $51.25
Change since picked: + 0.08
Earnings Date 05/01/06 (unconfirmed)
Average Daily Volume: 163 thousand

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Autoliv - ALV - close: 54.81 chg: -0.96 stop: 53.99

If you're already long the stock we would double-check your stop loss placement. Make sure you are comfortable with the risk you're taking. ALV's recent bounce from support is failing. Shares lost 1.7% on Friday and are now pulling back toward technical support at the rising 50-dma. Of course this offers another entry point to consider long positions near support but we'd wait for signs of a bounce first. The P&F chart remains bullish with a $95 target. Our target is the $59.85-60.00 range. Please note that we're running out of time on the play and it may not be prudent to open new positions. The only earnings date we have for ALV is April 27th but that has not been confirmed yet. We do not want to hold over the announcement.

Picked on April 19 at $56.40
Change since picked: - 1.59
Earnings Date 04/27/06 (unconfirmed)
Average Daily Volume: 529 thousand

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Baidu.com - BIDU - close: 60.50 chg: -0.10 stop: 57.45*new*

We were a little surprised on Thursday night when BIDU was trading higher in after hours following a strong earnings report from Google (GOOG). BIDU is the number search service in China but GOOG is in second place and in GOOG's earnings report last night they said that the Chinese market was still up for grabs. Now some investors and pundits suspect that GOOG may end up buying BIDU and eliminate a rival. Other suggest that GOOG will merely compete with BIDU for the time being and consider other options (like a takeover) down the road. That may be why BIDU gapped higher on Friday morning and then reversed course. This is the second failed rally under $63.00 (and its exponential 200-dma) in the last two days. The overall pattern, with BIDU above resistance at $60.00, remains bullish but we hesitate to suggest new (aggressive) long positions here. If BIDU were to breakdown under $60 again we'd look for immediate support near $58.00. In an effort to reduce our risk we're going to raise our stop loss to $57.45. Our target is the $68.00-70.00 range. We do not want to hold over the May 9th earnings report.

Picked on April 20 at $62.55
Change since picked: - 2.05
Earnings Date 05/09/06 (confirmed)
Average Daily Volume: 877 thousand

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Digital Realty - DLR - close: 29.19 chg: -0.11 stop: 27.45

DLR experienced a little bit of profit taking on Friday morning but shares rebounded back above the $29.00 level minimizing its losses. Overall we see little change from its rising, bullish trend and the stock looks poised to make a run at our target in the $29.75-30.00 range. More aggressive traders may want to aim higher but we do not want to hold over the early May earnings report.

Picked on March 29 at $28.04
Change since picked: + 1.15
Earnings Date 05/06/06 (unconfirmed)
Average Daily Volume: 180 thousand

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Liberty Global - LBTYA - close: 20.60 chg: -0.28 stop: 19.95

We are suggesting that traders use caution here with LBTYA. The stock produced yet another failed rally at technical resistance at its descending, simple 100-dma. Friday's session also produced a bearish engulfing candlestick pattern. Volume came in above average on the decline. We would suggest that more conservative traders strongly consider exiting early right here to reduce their risk. You can always reconsider a new bullish position on a bounce from $20.00 or a new move over $21.50. We are not suggesting new plays. We have about two weeks left for this play to work out before we exit ahead of earnings. Our target is the $21.95 level but more aggressive traders may want to aim higher.

Picked on April 02 at $20.47
Change since picked: + 0.27
Earnings Date 05/08/06 (unconfirmed)
Average Daily Volume: 1.7 million

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Phillips Van-Heusen - PVH - cls: 38.62 chg: -0.40 stop: 36.39

Hmm... PVH turned in a rather bearish session on Friday. The stock gapped higher and hit $39.55 before quickly reversing lower. The move looks like a short-term bearish reversal and the stock looks headed toward the $38.00-37.50 region on Monday. We would be patient and wait and watch for a bounce from $38.00 (short-term support) or a bounce from $37.00 before considering new long positions. Our target will be the $42.00-42.50 range. We do expect some resistance near $40.00 to slow down PVH's ascent. Our time frame is about eight weeks. Keep your ears open for any news when PVH presents at the May 3rd Lehman Brothers retail seminar.

Picked on April 19 at $38.59
Change since picked: + 0.03
Earnings Date 06/19/06 (unconfirmed)
Average Daily Volume: 332 thousand

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PW Eagle - PWEI - close: 30.59 chg: -0.16 stop: 27.45 *new*

We have six trading days left for PWEI to build on the recent breakout over the $30.00 level. So far the stock has been consolidating sideways, which isn't necessarily a bad thing. Broken resistance at $30 does seem to be acting as new support. We would prefer to buy a dip and bounce near $29.00 but it may not occur. We are going to try and reduce our risk by raising the stop loss to $27.45. Our target is the $33.50-34.00 range. The P&F chart is bullish with a $43.00 target. We do not want to hold over the May 2nd earnings report.

Picked on April 16 at $28.92
Change since picked: + 1.67
Earnings Date 05/02/06 (confirmed)
Average Daily Volume: 500 thousand

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QuickLogic - QUIK - close: 6.10 chg: -0.10 stop: 5.84 *new*

The upward momentum in QUIK has vanished at least on the daily chart. QUIK is now producing a two-week bearish pattern of lower highs. The MACD has produced a new sell signal. Considering these signals we are not suggesting new bullish positions. Instead we're suggesting that readers consider exiting early for a small gain. We'll try and reduce our risk by raising the stop loss to 5.84. We're also going to adjust our target to $6.45. Don't forget that we want to avoid holding over the April 26th earnings report. Our plan is to exit on Tuesday afternoon near the closing bell.

Picked on April 02 at $ 5.74
Change since picked: + 0.36
Earnings Date 04/26/06 (confirmed)
Average Daily Volume: 242 thousand

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Threshold Pharma. - THLD - cls: 15.28 chg: -0.22 stop: 14.99

This is it. It has come down to do or die for our bullish play in THLD. The stock continued to consolidate lower on Friday and hit support at the $15.00 level before bouncing. Our stop loss is at $14.99. If THLD doesn't bounce from here the play will probably be over on Monday and considering the short-term technical indicators odds are good we'll be stopped out so we're not suggesting new long positions.

Picked on April 16 at $16.06
Change since picked: - 0.78
Earnings Date 05/08/06 (unconfirmed)
Average Daily Volume: 384 thousand
 

Short Play Updates

Advance Auto Parts - AAP - cls: 38.92 chg: -0.58 stop: 41.01

Bears should be happy. AAP produced a failed rally under $40.00 and under its descending 10-dma. The overall pattern remains bearish and we continue to target a decline into the $36.00-35.50 range. We're going to leave the stop loss at $41.01 for now but more conservative traders may want to set their stops closer to the $40.00 level. We do not want to hold over the mid-May earnings report.

Picked on April 11 at $39.41
Change since picked: - 0.49
Earnings Date 05/17/06 (unconfirmed)
Average Daily Volume: 943 thousand

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Aeropostale - ARO - close: 29.55 chg: -1.08 stop: 29.05

More aggressive traders might want to consider bearish positions right here. ARO has produced another failed rally near the top of its four-month trading range. We're still waiting for a breakdown below support near $28.00. We're using a trigger at $27.69 to open the play. If triggered our target is the $24.00 level.

Picked on April xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 03/09/06 (confirmed)
Average Daily Volume: 1.0 million

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Entercom - ETM - close: 26.40 chg: -0.28 stop: 27.55*new*

ETM continues to under perform. Shares lost another 1% on Friday with volume coming in way above the daily average. Unfortunately, ETM failed to close at a new low. We remain bearish but this does not look like a new entry point to short the stock. Broken support at $27.50 should now act as significant resistance. Our target is the $25.50-25.25 range. Please note that we're changing the stop loss to $27.55.

Picked on April 18 at $26.80 *gap down*
Change since picked: - 0.40
Earnings Date 05/08/06 (confirmed)
Average Daily Volume: 346 thousand
 

Closed Long Plays

Nordson Corp. - NDSN - close: 52.75 chg: +0.06 stop: 48.49

Target achieved. NDSN gapped open higher on Friday morning to open at $53.04 and then traded to $53.15 before spending the rest of the session bouncing between $52.00 and $53.00. Our target was the $53.00-53.50 range. More aggressive traders may want to keep their position open. The P&F chart points to a $66 target and NDSN is not expected to report earnings until late May.

Picked on March 29 at $49.25
Change since picked: + 3.50
Earnings Date 05/29/06 (unconfirmed)
Average Daily Volume: 161 thousand
 

Closed Short Plays

None
 

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