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New Plays
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TCHC CPSI

Play Editor's note: We are cautiously adding new bullish positions to the newsletter. Our opinion of the market has not changed from this weekend and we remain defensive.


New Long Plays

21st Century - TCHC - close: 22.37 change: +1.08 stop: 20.95

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:
TCHC spent three months consolidating lower but that changed on January 31st when the company raised its earnings guidance for 2007. The initial rally has stalled under the 50-dma and 100-dma but now we're seeing a rebound on above average volume. Now that TCHC has broken its trendline of resistance we see the bounce as a new entry point to go long the stock. More conservative traders may want to wait for a rise past $23.35 and its 50-dma. Traders should also note that we can't find an earnings date for the company even though they recently raised their earnings guidance. We have two targets. Our conservative target is the $24.85-25.00 range. Our more aggressive target is the $27.00-27.50 range.

Picked on February 06 at $22.37
Change since picked: + 0.00
Earnings Date 00/00/07 (unconfirmed)
Average Daily Volume: 115 thousand
 

New Short Plays

Comptr.Prog.&Sys - CPSI - cls: 29.52 chg: +0.53 stop: 32.01

Company Description:
CPSI is a leading provider of healthcare information solutions for community hospitals with over 600 client hospitals in 46 states. Founded in 1979, the Company is a single-source vendor providing comprehensive software and hardware products, complemented by complete installation services and extensive support. (source: company press release or website)

Why We Like It:
The bearish pattern in CPSI has taken a turn for the worse. Shares had been slowly consolidating lower since its peak in December. The stock suddenly gapped down under support near $30.00 after its recent earnings report in early February. The company reported inline with estimates but guided lower. Today's oversold bounce to try and fill the gap failed at $30.75. We would use today's bearish reversal as a new entry point for shorts. Please note we're keeping the stop at $32.01 in case CPSI tries to fill the gap again. Any failed rally under $31.00 can be used as a new entry point for shorts. Our target is the $25.50-25.00 range. The P&F chart points to an $18 target. The most recent (January) data puts short interest at 10.3% of the company's 9.3 million-share float. That is a high amount of short interest and with such a small float it really increases the risk of a short squeeze so trade cautiously!!

Picked on February 06 at $29.52
Change since picked: + 0.00
Earnings Date 01/27/07 (unconfirmed)
Average Daily Volume: 97 thousand
 

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