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  YHOO

New Long Plays

None today.
 

New Short Plays

Editor's note: Our market bias is bearish but after the sharp Thursday-Friday sell-off we did not want to add too many new shorts only to see the markets produce an oversold bounce on Monday.


Psychiatric Sol. - PSYS - cls: 28.25 chg: -1.25 stop: 30.25

Company Description:
PSI offers an extensive continuum of behavioral health programs to critically ill children, adolescents and adults through its operation of 58 owned or leased freestanding psychiatric inpatient facilities with approximately 6,500 beds in 27 states. PSI also manages freestanding psychiatric inpatient facilities for government agencies and psychiatric inpatient units within medical/surgical hospitals owned by others. (source: company press release or website)

Why We Like It:
PSYS looks pretty weak here with a breakdown from its trading range and a breakdown under technical support at its 200-dma. Volume on Friday's decline was way above the average, which is definitely bearish. The recent move lower has produced a triple-bottom breakdown sell signal on its P&F chart pointing to a $21.00 target. Aggressive traders may want to short PSYS right here. We're concerned about a potential oversold bounce. That's why we are going to suggest a trigger to short PSYS at $27.75, which is under Friday's low. Readers can also watch for a failed rally under $29.50-30.00 as a potential entry point for shorts. Our target will be the $25.25-25.00 range. It is important to note that the most recent data puts short interest at 11% of the 52.5 million-share float. That's a lot of short interest and puts us in danger of a short squeeze should PSYS suddenly rally higher.

Picked on May xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 07/26/06 (unconfirmed)
Average Daily Volume: 645 thousand

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Yahoo! - YHOO - close: 30.81 chg: -0.18 stop: 32.55

Company Description:
Yahoo! Inc. is a leading global internet brand and one of the most trafficked Internet destinations worldwide. Yahoo! seeks to provide online products and services essential to users' lives, and offers a full range of tools and marketing solutions for businesses to connect with Internet users around the world. Yahoo! is headquartered in Sunnyvale, California. (source: company press release or website)

Why We Like It:
The INX Internet index has produced a bearish head-and-shoulders pattern. We believe that YHOO offers us a way to trade the weakness in the sector. Shares of YHOO have struggled to breakout over resistance at $34.00 for the last few weeks and now the stock has broken its trendline of higher lows. Technicals are bearish and the P&F chart points to a $16.00 target. We are suggesting shorts under $32.00. Readers can choose to look for a bounce back toward short-term resistance near $32.00 and its 50-dma or look for a breakdown under $30.00-29.75 as their entry point. Our target is the $27.00-26.00 range. Readers should note that short interest is about 6% of YHOO's 1.2 billion-share float.

Picked on May 14 at $30.81
Change since picked: + 0.00
Earnings Date 07/26/06 (unconfirmed)
Average Daily Volume: 20.2 million
 

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