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New Plays
Long Plays
Short Plays
DELL LFL
ESV  
WRLD  

New Long Plays

Play Editor's Note: The markets have been very bullish but they have become overbought and due for a correction. That doesn't mean they can't become more overbought before pulling back. Our concern is that the peak of earnings season has just passed and we're nearing the end of April. That means we'll start hearing more about the "sell in May and go away" theory. The trend is still up but we would be very careful about opening new positions at this time. We are adding new stocks to the newsletter but be extra careful about jumping in.

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Dell Inc. - DELL - cls: 25.23 change: +0.32 stop: 24.49

Company Description:
Dell Inc. listens to customers and delivers innovative technology and services they trust and value. Uniquely enabled by its direct business model, Dell is a leading global systems and services company and No. 34 on the Fortune 500. (source: company press release or website)

Why We Like It:
DELL's Point & Figure chart is still very negative after the July 2005 through July 2006 sell-off in the stock. Yet short-term DELL is making a comeback. The stock spent the last two weeks trading sideways and digesting the March-April gains. Now we're seeing signs of another leg higher. Maybe MSFT's positive news on Vista will keep the ball rolling with DELL. We'll play with a relatively tight stop loss at $24.49. Our target is the $27.25-27.50 range. We do not want to hold over the late May earnings report.

Picked on April 29 at $25.23
Change since picked: + 0.00
Earnings Date 05/31/07 (confirmed)
Average Daily Volume: 21.9 million

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ENSCO - ESV - close: 56.84 change: +1.09 stop: 53.44

Company Description:
ENSCO, headquartered in Dallas, Texas, owns and operates a modern fleet of offshore drilling rigs servicing the petroleum industry on a global basis. (source: company press release or website)

Why We Like It:
Oil Service stocks displayed relative strength on Friday. It didn't hurt having crude oil on the rise. Shares of ESV broke out to a new 52-week high and above its recent five-week trading range. We're suggesting long positions with ESV above $56.00. There is potential resistance at the old high near $58.75 but we suspect that ESV will be able to rally past it. The P&F chart points to a $76 target. We have two targets. Our conservative target is $59.85-60.00. Our aggressive target is the $62.50-65.00 range.

Picked on April 29 at $56.84
Change since picked: + 0.00
Earnings Date 04/24/07 (confirmed)
Average Daily Volume: 2.9 million

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World Acceptance Corp. - WRLD - cls: 44.58 chg: +0.93 stop: 40.99

Company Description:
World Acceptance Corporation is one of the largest small-loan consumer finance companies, operating 731 offices in eleven states and Mexico. It is also the parent company of ParaData Financial Systems, a provider of computer software solutions for the consumer finance industry. (source: company press release or website)

Why We Like It:
Shares of WLRD already appeared to be on the rebound during the last few weeks. The recent earnings report was strong enough to spark a breakout over technical resistance at the 100 and 200-dma. Thursday's session looked like a failed rally but traders bought the dip on Friday. This move over $43.00 looks like an entry point to buy the stock. Our target is the $49.50-50.00 range. The P&F chart points to a $56 target.

Picked on April 29 at $44.58
Change since picked: + 0.00
Earnings Date 04/26/07 (confirmed)
Average Daily Volume: 180 thousand
 

New Short Plays

Lan Airlines - LFL - close: 73.61 chg: -0.37 stop: 76.05

Company Description:
LAN Airlines is one of the leading airlines in Latin America. "LAN" makes reference to the consolidated entity that includes LAN Airlines, LAN Express, LAN Peru, LAN Ecuador, and LAN Argentina, as well as LAN Cargo and its affiliates. The LAN Alliance serves 15 destinations in Chile, 12 destinations in Peru, nine destinations in Argentina, two destinations in Ecuador, 13 destinations in other Latin American countries and the Caribbean, three destinations in the United States, two destinations in Europe and four destinations in the South Pacific, as well as 52 additional international destinations through its various code-share agreements. Currently, the LAN Alliance operates 70 passenger aircraft and 10 dedicated freighters. (source: company press release or website)

Why We Like It:
The P&F chart and the daily chart both look bullish for LFL. Yet we're seeing some signs that the stock will breakdown not up. The daily chart has a bearish divergence between price and some of its technical indicators. The weekly chart's MACD is on the verge of a new sell signal. Thus far LFL has been able to shrug off any rise in crude oil but we suspect that crude is poised to breakout higher from here. We are suggesting a trigger to short LFL at $71.49, which is under the simple 50-dma. More conservative traders may want to wait for a breakdown under $70.00 before considering shorts. If LFL continues to rally and breaks out past significant resistance at the $76.00 level, then nimble traders may want to switch direction. If triggered at $71.49 then we suggest two targets. Our first target is the $66.00-65.00 range (near the rising 100-dma). Our second, more aggressive target, will be the $61.00-60.00 range. FYI: The most recent data puts short interest at 750K shares versus the 19.3 million-share float. LFL has about 63.7 million shares outstanding.

Picked on April xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 04/24/07 (confirmed)
Average Daily Volume: 189 thousand
 

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