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New Plays
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RAIL XLE
RATE  

New Long Plays

FreightCar America - RAIL - cls: 52.73 chg: +1.26 stop: 49.95

Company Description:
FreightCar America, Inc. manufactures railroad freight cars, with particular expertise in coal-carrying railcars. In addition to coal cars, FreightCar America designs and builds bulk commodity cars, flat cars, mill gondola cars, intermodal cars, coil steel cars and motor vehicle carriers. It is headquartered in Chicago, Illinois and has manufacturing facilities in Danville, Illinois, Roanoke, Virginia and Johnstown, Pennsylvania. (source: company press release or website)

Why We Like It:
The railroad stocks are on the rebound and the Dow Jones Transportation index is hitting new highs. We expect stocks to continue higher and that will give the railroads a chance to catch up to the rest of the transportation sector. Shares of RAIL turned in a strong performance last week. On July 11th the stock was upgraded to a "strong buy" and by Friday shares of RAIL were breaking out over resistance near $52.00 and its simple 200-dma. The P&F chart is still bearish but RAIL is on the verge of a new buy signal if it can trade over $53.00. We are suggesting long positions now although more patient traders may want to consider waiting for a dip back toward what should be support around $52.00. Our target is the $57.00-58.00 range. More aggressive traders may wan to aim closer to $60.00. This is somewhat aggressive because we don't have a lot of time. We plan to exit ahead of the July 26th earnings report.

Picked on July 15 at $52.73
Change since picked: + 0.00
Earnings Date 07/26/07 (confirmed)
Average Daily Volume: 381 thousand

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Bankrate - RATE - cls: 51.96 chg: +1.87 stop: 48.99

Company Description:
Bankrate, Inc. owns and operates Bankrate.com, a leading Internet consumer banking marketplace. Bankrate.com is a destination site of personal finance channels, including banking, investing, taxes, debt management and college finance. Bankrate is the leading aggregator of more than 300 financial products, including mortgages, credit cards, new and used auto loans, money market accounts and CDs, checking and ATM fees, home equity loans and online banking fees. (source: company press release or website)

Why We Like It:
Shares of RATE hit new all-time highs on Friday after some positive analyst comments fueled a breakout from its four-week trading range. Volume came in strong on the rally and we see the breakout over $50.00 as a new entry point to buy the stock. Readers can choose to go long the stock now or hope for a dip back towards $50.00, which as broken resistance should be new support. We have a little less than three weeks before RATE reports earnings. Our short-term target is the $54.90-55.00 range. More aggressive traders may want to aim higher.

Picked on July 15 at $51.96
Change since picked: + 0.00
Earnings Date 08/02/07 (confirmed)
Average Daily Volume: 331 thousand
 

New Short Plays

Energy Sector SPDR - XLE - cls: 73.95 chg: +0.72 stop: 75.01

Company Description:
The XLE is an exchanged traded fund (ETF) focused on the oil, gas and oil services sector.

Why We Like It:
Crude oil has a pattern of crashing in early August. The oil companies finally build up enough inventory to get us past the rest of the summer driving season and the price of crude sees a significant correction. We are suggesting that investors can take advantage of this pattern by shorting the XLE. However, we are early! August is about three weeks away and the top tends to show up in the first couple of weeks of August. Two things can de-rail this pattern. Any serious rise in geo-political tensions, namely Iran, could keep crude oil high. The more likely scenario would be any news of a hurricane aimed toward the Gulf of Mexico. Currently there haven't been any storms and we're nearing the height of hurricane season that peaks around September 10th. As long as the weather cooperates we're expecting another correction in crude, which will pull the energy stocks lower, at least for a few weeks. Right now we're suggesting a trigger to short the XLE at $69.75. We honestly don't expect to be triggered until early August so we'll make adjustments to our entry point and stop loss as necessary.

Picked on July xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 00/00/00 (unconfirmed)
Average Daily Volume: 19.1 million
 

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