Option Investor
New Plays
Printer friendly version
New Plays
Long Plays
Short Plays
None CSH

Play Editor's note: We looked at hundreds of stocks this weekend and it was a struggle to find an attractive candidate for either bullish or bearish strategies. The market action lately suggests we could see more profit taking but the market is technically still in its bullish trend and has yet to break any significant levels of support. We are going to add a couple of bearish candidates to the newsletter but readers may want to wait for more follow through lower in the major market averages before considering new positions!

New Long Plays

None today.

New Short Plays

Cash Amer. - CSH - close: 42.51 chg: -0.58 stop: 44.75

Company Description:
Cash America International, Inc. is a provider of specialty financial services to individuals in the United States with 905 total locations as of September 30, 2006. Cash America is the largest provider of secured non-recourse loans to individuals, commonly referred to as pawn loans, through 474 locations in 23 states under the brand names Cash America Pawn and SuperPawn. (source: company press release or website)

Why We Like It:
The pawn shop stocks enjoyed the same summer and fall rally that most of the market has experienced but it looks like that bullish trend is now in jeopardy. The major players in the group broke down sharply in mid January but have since rebounded. Only the rebound in shares of CSH have failed at resistance twice. The initial bounce failed at resistance near $45.00 and its 50-dma. After sinking to a new relative low near its 200-ema in late January, shares of CSH rebounded only to fail under its 50-dma now under the $45.00 level. With the bounce rolling over, bearish technical indicators, a breakdown under its 100-dma, and weakness in the major averages, it looks like now is a good time to short CSH. We're suggesting shorts now with CSH under $44.00. More conservative traders may want to wait for a new drop under $42.00. Our target is the $39.00-38.50 range, which is where we expect CSH to meet up with its 200-ema again. We'll put our stop loss just above the 50-dma. The P&F chart points to a $33.00 target.

Picked on February 11 at $42.51
Change since picked: + 0.00
Earnings Date 04/26/07 (unconfirmed)
Average Daily Volume: 390 thousand


Illumina - ILMN - close: 34.08 change: -1.11 stop: 36.16

Company Description:
Illumina is developing next-generation tools for the large-scale analysis of genetic variation and function. The Company's proprietary BeadArray technology -- now used in leading genomics centers around the world -- provides the throughput, cost effectiveness and flexibility necessary to enable researchers in the life sciences and pharmaceutical industries to perform the billions of tests necessary to extract medically valuable information from advances in genomics and proteomics. (source: company press release or website)

Why We Like It:
ILMN's recent earnings report was better than expected but the company's guidance did not meet up with Wall Street's expectations and the stock sank. The stock peaked in October last year and has been consolidating sideways ever since. The current sell-off is a breakdown from ILMN's long-term bullish trend and Friday's decline is a breakdown under technical support at the 200-dma. We are suggesting shorts with ILMN under $35.00. Our target is the $30.50-30.00 range. The P&F chart points to a $25 target. FYI: Traders should note that the latest (January) data put short interest at 11.8% of the company's 43 million-share float. That is relatively high short interest and raises the risk of a short squeeze should the stock rebound unexpectedly.

Picked on February xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 02/01/07 (confirmed)
Average Daily Volume: 1.0 million

Premier Investor New Play Archives