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New Plays
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New Plays
Long Plays
Short Plays
ALL AMGN
  MCHP
  NVDA

Play Editor's Note: I seriously considered not adding any new plays to the newsletter this weekend. Everything looks bearish. Yet how can you confidently add new bearish positions after a 200-point drop in the NASDAQ and a 600-point drop in the DJIA in just the last three days. Stocks are very short-term oversold and due for a bounce. Adding bearish positions now is just asking to get stopped out on an oversold bounce. However, the major averages closed near their lows for the session and the only thing that stopped them from hitting new lows for the day was the closing bell. Without a doubt the market's trend and attitude has changed and any fourth quarter rally is in serious jeopardy right now. We are adding a few plays this weekend but I am urging an extra level of caution on entering and exiting anything at the moment. The bearish plays we did add do not look oversold yet. FYI: A few stocks we're keeping an eye on as potential plays are ALTR, EBAY, MTG, PMI, and SKM.


New Long Plays

Allstate Corp. - ALL - close: 53.13 chg: +0.64 stop: 49.99

Company Description:
The Allstate Corporation is the nations largest publicly held personal lines insurer. Widely known through the Youre In Good Hands With Allstate slogan, Allstate helps individuals in approximately 17 million households protect what they have today and better prepare for tomorrow through approximately 14,800 exclusive agencies and financial representatives in the U.S. and Canada. (source: company press release or website)

Why We Like It:
We're adding ALL as a bullish candidate due to its relative strength. The stock completely ignored the market weakness on Friday. Furthermore, shares are bouncing from very significant support near $50.00. Technicals are improving although the P&F chart remains bearish. More aggressive traders may want to buy the stock now. We are suggesting readers jump in on a dip. Our suggested entry point would be on a dip into the $52.50-52.00 range. Our official "trigger" will be $52.50. Looking at the daily chart we do see some resistance near $56.75-57.00. Our target will be the $57.50-58.00 range or its 200-dma, whichever comes first. Our stop is at $49.99 but more conservative traders may want to use a stop loss closer to $51.00.

Picked on November xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 01/30/08 (unconfirmed)
Average Daily Volume: 4.1 million
 

New Short Plays

Amgen - AMGN - close: 54.28 change: -1.75 stop: 57.76

Company Description:
Amgen discovers, develops and delivers innovative human therapeutics. A biotechnology pioneer since 1980, Amgen was one of the first companies to realize the new sciences promise by bringing safe and effective medicines from lab, to manufacturing plant, to patient. (source: company press release or website)

Why We Like It:
We are adding AMGN as a bearish candidate following Friday's breakdown. The stock slipped through multiple levels of support and fell through the bottom of its multi-week trading range. This looks like an entry point to catch a drop toward the $50.00 region. Our target is the $50.15-50.00 mark. More aggressive traders could aim for the August lows. Our stop is a little bit wide, which makes this higher risk. Furthermore any time you play a biotech company there is a higher level of risk. You never know when there will be a positive or negative press release about some drug, some clinical trial or some news from the FDA or a rival that could send shares of a biotech stock gapping either direction.

Picked on November 11 at $54.28
Change since picked: + 0.00
Earnings Date 01/24/08 (unconfirmed)
Average Daily Volume: 10.4 million

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Microchip Tech. - MCHP - cls: 31.51 change: -0.36 stop: 33.05

Company Description:
Microchip Technology Inc. is a leading provider of microcontroller and analog semiconductors, providing low-risk product development, lower total system cost and faster time to market for thousands of diverse customer applications worldwide. (source: company press release or website)

Why We Like It:
MCHP gapped down back in October after issuing an earnings warning on weaker sales. The stock bottomed near $30 and produced a nice oversold bounce. That bounce is now fading and the technical picture is turning bearish again. There is obvious support near $30 but our target is the $28.50-28.00 level. The P&F chart is bearish with a $19 target.

Picked on November xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 01/31/08 (unconfirmed)
Average Daily Volume: 3.1 million

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NVIDIA - NVDA - cls: 33.36 change: -0.48 stop: 35.05

Company Description:
NVIDIA Corporation is the worldwide leader in programmable graphics processor technologies. The Company creates innovative, industry-changing products for computing, consumer electronics, and mobile devices. NVIDIA is headquartered in Santa Clara, CA and has offices throughout Asia, Europe, and the Americas. (source: company press release or website)

Why We Like It:
NVDA just reported earnings on Thursday this past week and the results were great. Management even guided higher. Yet the after hours pop on Thursday night wilted under the Friday sell-off in technology shares. If tech continues to sink then NVDA could see more profit taking. Ideally we'd like to find a bullish entry point to jump in on NVDA's long-term up trend. However, short-term the stock could see a significant correction. We are suggesting a trigger to short NVDA at $32.45, which is under recent support and its 100-dma. If triggered our target is the 200-dma (currently near $27.26 but rising). FYI: A drop under $32.00 would produce a new P&F chart sell signal.

Picked on November xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 11/08/07 (confirmed)
Average Daily Volume: thousand
 

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