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New Plays
Long Plays
Short Plays
RTK FLEX
  TLAB

New Long Plays

Rentech - RTK - close: 2.64 chg: +0.02 stop: 2.23

Company Description:
Rentech was incorporated in 1981 to develop technologies that transform under-utilized energy resources into valuable and clean alternative fuels. The Company has developed an advanced derivative of the well-established Fischer-Tropsch, or FT, process for manufacturing ultra-clean diesel fuel and other fuel products. (source: company press release or website)

Why We Like It:
We think there is more upside in RTK. Shares spent most of the November-February time frame trading sideways between $3.50 and $4.00. The sell-off that began in late February took shares down to an intraday low of $1.95 last Tuesday. That looks like a bottom. Wednesday also brought the bullish reversal following news that the company has won permit approval for two coal-to-liquid plants. This news sparked a big bounce fueled by short covering and we suspect there is more short covering to come. The most recent (December) data for RTK listed short interest at 10.8% of the 126 million-share float. Volume on the Wednesday-Thursday bounce was about 1.6 million and 1.7 million, respectively. We are suggesting long positions in RTK with the stock above $2.50. We are going to use a relatively wide stop loss because shares have been so volatile lately and this makes the play a little more high-risk. We'll set the stop at $2.23. Our target will be the $3.40-3.50 range.

Picked on March 18 at $ 2.64
Change since picked: + 0.00
Earnings Date 05/11/07 (unconfirmed)
Average Daily Volume: 915 thousand
 

New Short Plays

Flextronics - FLEX - cls: 11.01 chg: -0.14 stop: 11.51

Company Description:
Headquartered in Singapore (Singapore Reg. No. 199002645H), Flextronics is a leading Electronics Manufacturing Services (EMS) provider focused on delivering complete design, engineering and manufacturing services to automotive, computing, consumer digital, industrial, infrastructure, medical and mobile OEMs. (source: company press release or website)

Why We Like It:
FLEX has broken down from its trading range in what almost looks like a bearish head-and-shoulders pattern. The oversold bounce that began in early March is rolling over and short-term technical indicators are rolling over as well. We are suggesting shorts with FLEX under $11.20. More conservative traders may want to see a decline under $10.90 or $10.65 first before initiating positions. If you choose the lower entry point then tighten your stop loss. We'll set our stop at $11.51 for now. If you want to reduce your risk try a stop above $11.31 or above $11.20 but that raises the risk you may get stopped out on an intraday spike. Our target is the $10.10-10.00 range. We do not want to hold over the early May earnings report. FYI: The most recent data put short interest at a minor 1.7% of the float.

Picked on March 18 at $11.01
Change since picked: + 0.00
Earnings Date 05/01/07 (unconfirmed)
Average Daily Volume: 6.0 million

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Tellabs - TLAB - close: 9.96 chg: +0.03 stop: 10.26

Company Description:
Tellabs advances telecommunications networks to meet the evolving needs of users. Solutions from Tellabs enable service providers to deliver high-quality voice, video and data services over wireline and wireless networks around the world. (source: company press release or website)

Why We Like It:
Action in TLAB over the last few months has been bearish with a pattern of lower highs. You could argue the opposite that the stock has been building a pattern of higher lows but it looks like TLAB just broke down under that trendline (see chart). More recently TLAB has been struggling under short-term resistance at its 10-dma and the stock looks ready to roll over under that technical level again. We're suggesting shorts with TLAB under $10.00. More conservative traders may want to see a new relative low under $9.75 first before initiating positions. Actually everyone but the aggressive traders may want to wait for a new relative low since TLAB does appear to have a long-term trendline of support.. We'll set our stop loss at $10.26 but you might be able to get away with a tighter stop. Our target is the $9.10-9.00 range. We do not want to hold over the late April earnings report. FYI: The P&F chart points to a $2.00 target. The most recent data put short interest at a minor 2.2% of the float.

Picked on March 18 at $ 9.96
Change since picked: + 0.00
Earnings Date 04/24/07 (unconfirmed)
Average Daily Volume: 7.5 million
 

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