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New Plays
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New Plays
Long Plays
Short Plays
EMC SPLS
WIRE  
WNR  

Play Editor's Note: We are very reluctant to add new bullish positions to the newsletter. The market averages are overbought and due for a correction. Unfortunately, Friday's bounce took the bite out of Thursday's decline. If you are patient we would hesitate to open new positions for a day or two and see what mood the market is in after Memorial day.


New Long Plays

EMC Corp. - EMC - close: 16.46 change: +0.16 stop: 15.45

Company Description:
EMC Corporation is the world's leading developer and provider of information infrastructure technology and solutions that enable organizations of all sizes to transform the way they compete and create value from their information. (source: company press release or website)

Why We Like It:
EMC has been showing some relative strength lately. The stock broke out over significant resistance at the $16.00 level on Thursday. We did not add it as a new play on Thursday because the move looked like a failed rally given the big pull back from its intraday highs. Yet Friday saw EMC continue higher and on strong volume. We would much rather buy a dip back toward $16.00, which should be new support, but we are suggesting new long positions now. Our target is the $18.50-20.00 range. The P&F chart has a $24.00 target.

Picked on May 27 at $16.46
Change since picked: + 0.00
Earnings Date 07/17/07 (unconfirmed)
Average Daily Volume: 26.6 million

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Encore Wire Corp. - WIRE - cls: 29.26 chg: +0.80 stop: 27.95

Company Description:
Encore Wire Corporation manufactures a broad range of copper electrical wire for interior wiring in homes, apartments, manufactured housing and commercial and industrial buildings. (source: company press release or website)

Why We Like It:
Friday marked the third time in the last month that traders bought the dip near $28.00. We see Friday's rebound as a new entry point to buy WIRE. More conservative traders may want to wait for more confirmation and look for a breakout over the $30.00 mark before initiating positions. Many of the technical indicators are starting to turn positive again and the Point & Figure chart suggests a $46 price target. We are targeting the $32.50-33.00 range.

Picked on May 27 at $29.26
Change since picked: + 0.00
Earnings Date 07/24/07 (unconfirmed)
Average Daily Volume: 383 thousand

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Western Refining - WNR - cls: 42.72 chg: +1.59 stop: 39.75

Company Description:
Western Refining, Inc., headquartered in El Paso, Texas, is an independent crude oil refiner and marketer of refined products, operating primarily in the Southwest region of the United States, including Arizona, New Mexico and West Texas. (source: company press release or website)

Why We Like It:
Memorial Day weekend kicks off summer and the peak driving season in the U.S. If you haven't noticed gasoline prices are at all-time highs across the country and they're only going up. Many of the refiners have been hitting new highs. WNR is one such refining stock. Shares rose 3.8% on Friday in spite of some negative analyst comments. We are suggesting bullish positions now or on a dip back toward the 10-dma near $40.80. We're using a stop loss at $39.75. More aggressive traders may want to put their stop under the 50-dma near $39.00. Our target is the $47.00-50.00 range. The Point & Figure chart is forecasting a $49.50 target.

Picked on May 27 at $42.72
Change since picked: + 0.00
Earnings Date 08/02/07 (unconfirmed)
Average Daily Volume: 801 thousand
 

New Short Plays

Staples Inc. - SPLS - cls: 24.40 chg: +0.09 stop: 25.76

Company Description:
Staples, Inc. invented the office superstore concept in 1986 and today is the world's largest office products company. With 74,000 talented associates, the company is committed to making it easy to buy a wide range of office products, including supplies, technology, furniture, and business services. (source: company press release or website)

Why We Like It:
SPLS reported earnings this past week and the results were lackluster. Investors sold the news on Tuesday. The following oversold bounce failed under its 200-dma and rallied just enough to "fill the gap". Technical indicators have turned bearish and the weekly chart's latest candlestick is a bearish engulfing pattern. We are suggesting shorts with SPLS under $24.50 although another failed rally under $25.00 would work as an entry point too. Our target is the $22.00 level. We will use a relatively wide (aggressive) stop loss until we see some further confirmation lower.

Picked on May 27 at $24.40
Change since picked: + 0.00
Earnings Date 07/27/07 (unconfirmed)
Average Daily Volume: 7.0 million
 

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