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  NTLI
  TCHC

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New Short Plays

New Century - NEW - close: 34.47 change: -1.24 stop: 36.55

Company Description:
Founded in 1995 and headquartered in Irvine, California, New Century Financial Corporation is a real estate investment trust (REIT) and one of the nation's premier mortgage finance companies, providing mortgage products to borrowers nationwide through its operating subsidiaries, New Century Mortgage Corporation and Home123 Corporation. (source: company press release or website)

Why We Like It:
Shares of NEW broke down on Friday after reporting that loan production was down significantly. The news pushed NEW through support near $35.50 and on big volume. Almost anyone with a significant non-prime lending department has been getting beat up as investors worry about foreclosures. We see the breakdown under $35.50 as a new entry point for shorts. Traders can choose to open positions now or wait for a potential bounce back toward $35.00 or $35.50 as an entry point. Our target is the $31.00-30.00 range. FYI: The most recent (November) data put short interest at 22% of the company's 50 million-share float. That is a very high degree of short interest and it does raise the risk of a short squeeze if NEW reverses sharply higher.

Picked on December 10 at $34.47
Change since picked: + 0.00
Earnings Date 02/01/07 (unconfirmed)
Average Daily Volume: 1.4 million

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NTL Inc. - NTLI - close: 24.44 change: -0.68 stop: 26.01

Company Description:
We are a leading provider of broadband, digital television, telephony, content and communications services, reaching over 50% of UK homes and 85% of UK businesses. (source: company press release or website)

Why We Like It:
Shares of NTLI broke down under support in mid November and have since seen two oversold bounces both fail at the $26.00 level. The recent weakness looks like a prelude to a new leg lower. We are suggesting shorts in NTLI with the stock under $25.00. There does seem to be some support near the $23.50 region but the Point & Figure chart points to a $9.00 target. We will target a decline into the $21.00-20.00 range. FYI: The most recent (November) data put short interest at 3.5% of the company's 324 million-share float.

Picked on December 10 at $24.44
Change since picked: + 0.00
Earnings Date 11/07/06 (confirmed)
Average Daily Volume: 3.1 million

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21st Century - TCHC - close: 24.84 change: -1.16 stop: 26.75

Company Description:
The Company, through its subsidiaries, underwrites general liability insurance homeowners' property and casualty insurance, flood insurance and personal automobile insurance in the State of Florida. The Company underwrites general liability coverage as an admitted carrier in the States of Louisiana, Texas and Alabama for more than 300 classes of business, including special events. The Company also operates as an approved (non-admitted) carrier in the States of Georgia, Kentucky, Virginia, South Carolina, Missouri and Arkansas offering the same general liability products. (source: company press release or website)

Why We Like It:
We did not see any specific news to account for TCHC's relative weakness on Friday. The stock was already in a consolidation pattern with a bearish trend of lower highs. It looks like investors decided it was time to do some profit taking and TCHC lost 4.4% on strong volume. The decline produced a bearish breakdown under support at $25.50, 25.00 and its 50-dma. The P&F chart is still bullish for now but a drop under $24 should produce a new sell signal. We are suggesting shorts with TCHC under $25.00. Our target is the $21.50-20.00 range. The most recent (November) data puts short interest at over 6% of TCHC's 6.4% float. That's a very small float so 6% might be enough short interest to really increase the risk of a short squeeze should TCHC reverse higher. Bear that in mind when considering plays as you may want a tighter stop loss.

Picked on December 10 at $24.84
Change since picked: + 0.00
Earnings Date 11/01/06 (confirmed)
Average Daily Volume: 115 thousand
 

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