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New Short Plays

UAL Corp. - UAUA - close: 26.14 chg: -1.38 stop: 28.01

Company Description:
United Airlines is the world's second largest airline operating more than 3,700 flights a day on United, United Express and Ted to more than 210 U.S. domestic and international destinations from its hubs in Los Angeles, San Francisco, Denver, Chicago and Washington, D.C. With key global air rights in the Asia-Pacific region, Europe and Latin America, United is one of the largest international carriers based in the United States. United is also a founding member of Star Alliance, which provides connections for our customers to 842 destinations in 152 countries worldwide. United's 57,000 employees reside in every U.S. state and in many countries around the world. (source: company press release or website)

Why We Like It:
We considered adding another bullish long candidate to the play list tonight but the major indices are still trading under resistance. Instead we're going to add this airline stock as a bearish, short candidate. The stock has been trading in a bearish pattern of lower highs for months. Currently shares are poised to breakdown under support near $25.80-25.85. The company reported earnings this morning and the news was mixed but management issued downside guidance going forward. A quick look at the chart does show that UAUA can be volatile so be ready for a lot of ups and downs. Readers should know that as an airline the stock will probably see added volatility as the airline industry reacts to moves in the price of oil. We also want to point out that the $25.00 level might be round-number support but we can't tell at this point. We are suggesting a trigger to short the stock at $25.70. Our target is the $22.00-20.00 range. FYI: The latest (July) data puts short interest at 3.8% of its 85.6 million-share float.

Picked on August xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 07/31/06 (confirmed)
Average Daily Volume: 1.8 million
 

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