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New Plays
Long Plays
Short Plays
QID AVP
  GPS
  IPG
  JDSU
  NVEC

Play Editor's Note: We are facing a dilemma. This past week was bearish and culminated into a frenzied sell-off on Friday. The recent weakness has produced a bumper crop of sell signals among equities. We need to juggle our bullish bias for the fourth quarter with the short-term downtrend. Plus, to make the waters even more muddy many stocks are now looking short-term oversold. I would expect an oversold bounce soon although probably not Monday morning. Do traders buy the bounce or look for it to roll over and use it as a new entry point for bearish positions? One of the hardest things traders have to do is trade what we see or what the market is giving us and to avoid trading our bias. It's been said before - the market is always right whether we agree with it or not.

FYI: A couple of stocks we are watching and would consider buying a dip on would be ALTU and INTC.


New Long Plays

UltraShort QQQ - QID - cls: 37.40 change: +1.70 stop: 35.49

Company Description:
The Ultra Short QQQ ProShares is an Exchanged Traded Fund (ETF) designed to mimic the inverse of the daily performance of the NASDAQ 100 index.

Why We Like It:
If the markets are poised to correct lower then we can take advantage of it with the QID. This ETF has been consolidating sideways the past few days and looks poised to breakout higher. We are suggesting a trigger at $37.75 to buy the QID. More conservative traders may want to see a rise past $38.00. Our target is the $41.00-42.50 range.

Picked on October xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 00/00/00 (unconfirmed)
Average Daily Volume: 24.9 million
 

New Short Plays

Avon Products - AVP - cls: 36.19 chg: -1.31 stop: 38.01

Company Description:
Avon, the company for women, is a leading global beauty company, with almost $9 billion in annual revenue. As the world's largest direct seller, Avon markets to women in well over 100 countries through over five million independent Avon Sales Representatives. (source: company press release or website)

Why We Like It:
The September rally in AVP has failed. Shares ran into trouble around $38.50 and now the stock is breaking down from a three week sideways consolidation. Furthermore AVP has produced a larger pattern of lower highs, which is bearish. Meanwhile on the daily chart the MACD has produced a new sell signal. Friday's decline produced a breakdown below support near $37.00 and its 200-dma. We have two targets. Our first target is the $34.10-34.00 range. Our second target is the $32.50-32.00 zone. We do not want to hold over the October 30th earnings report.

Picked on October 21 at $36.19
Change since picked: + 0.00
Earnings Date 10/30/07 (confirmed)
Average Daily Volume: 2.6 million

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Gap Inc. - GPS - cls: 17.75 change: -0.53 stop: 19.05

Company Description:
Gap Inc. is a leading international specialty retailer offering clothing, accessories and personal care products for men, women, children and babies under the Gap, Banana Republic, Old Navy, and Piperlime brand names. Fiscal 2006 sales were $15.9 billion. Gap Inc. operates more than 3,100 stores in the United States, the United Kingdom, Canada, France, Ireland and Japan. (source: company press release or website)

Why We Like It:
The market is worried about the retailers. Analysts are not expecting a very good holiday season for the group. GPS' recent same-store sales were lower than expected. The rising price of oil certainly doesn't help the sector. Shares of GPS have broken down through a cloud of potential support. We're suggesting shorts now with GPS under $18.50. Our target is the $16.00-15.50 range.

Picked on October 21 at $17.75
Change since picked: + 0.00
Earnings Date 11/21/07 (unconfirmed)
Average Daily Volume: 8.7 million

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Interpublic Group - IPG - cls: 9.93 change: -0.21 stop: 10.31

Company Description:
Interpublic is one of the world's leading organizations of advertising agencies and marketing services companies. (source: company press release or website)

Why We Like It:
IPG's bearish trend of lower highs is about to push the stock past support in the $10.00-9.90 zone. We are suggesting a trigger to short IPG at $9.80. If triggered our target is the $8.10-8.00 range but that is probably too aggressive given our time frame. We do not want to hold over the November 1st earnings report. FYI: The latest data puts short interest for IPG at 8.4% of its 438 million-share float.

Picked on October xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 11/01/07 (confirmed)
Average Daily Volume: 3.5 million

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JDS Uniphase - JDSU - cls: 15.23 change: -0.48 stop: 16.01

Company Description:
JDSU enables broadband and optical innovation in the communications, commercial and consumer markets. JDSU is a leading provider of communications test and measurement solutions and optical products for telecommunications service providers, cable operators, and network equipment manufacturers. (source: company press release or website)

Why We Like It:
We can remember when JDSU used to stand for "Just Don't Sell Us". Shares of JDSU are a long way from their hey-day levels and it looks like shareholders are in for another dip. The stock's bounce has rolled over under resistance at the $16.00 level. There is potential support near $15.00 and its 200-dma but most of the technical indicators are suggesting the next move will be down. We're suggesting shorts now with a target in the $13.75-13.50 zone. We do not want to hold over the October 31st earnings report.

Picked on October 21 at $15.23
Change since picked: + 0.00
Earnings Date 10/31/07 (confirmed)
Average Daily Volume: 3.8 million

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NVE Corp. - NVEC - cls: 29.75 change: -1.02 stop: 31.51

Company Description:
NVE is a leader in the practical commercialization of spintronics, a nanotechnology that many experts believe represents the next generation of microelectronics. NVE licenses its MRAM intellectual property and sells spintronic products, including sensors and couplers, to revolutionize data sensing and transmission. (source: company press release or website)

Why We Like It:
NVEC reported earnings a few days ago and beat by five cents. The stock spiked higher on the news. Unfortunately for shareholders the rally didn't last. Now NVEC is breaking down under the $30.00 level and its 200-dma. Shares appear to have some support in the $29.50-29.60 zone. We're suggesting a trigger to short NVEC at $29.40. If triggered our target is the $25.50-25.00 range. FYI: We would consider this an aggressive play simply for the fact that NVEC's average daily volume is very low! However, the real risk is a short squeeze. The latest data puts short interest at more than 30% of NVEC's very, very small 4.2-million share float. That represents a big risk for a short squeeze.

Picked on October xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 10/17/07 (confirmed)
Average Daily Volume: 76 thousand
 

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