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New Short Plays

Tempur-Pedic Intl. - TPX - cls: 30.67 chg: +0.11 stop: 32.11

Company Description:
Tempur-Pedic International Inc. manufactures and distributes mattresses and pillows made from its proprietary TEMPUR pressure-relieving material. It is the worldwide leader in premium sleep, the fastest growing segment of the estimated $13 billion global mattress market. (source: company press release or website)

Why We Like It:
TPX looks like it's in the process of breaking down from its long-term up trend. The oversold bounce from its November lows has found new resistance at $32.00. Yesterday's session produced a bearish engulfing candlestick pattern and while today's sessions doesn't offer any confirmation of the bearish reversal the overall pattern continues to look bearish. Overhead resistance near $32.00 is bolstered by its 100-dma and soon to be its 50-dma. The P&F chart is bearish with a $22.00 target. We are suggesting shorts right now. However, after the bell tonight, it was announced that the U.S. court system has dismissed an antitrust class action suit against TPX. The stock might see a bounce on this news. Thus it might pay off to wait and see if TPX provides another failed rally near $32.00 before initiating positions. More conservative traders may want to wait for a decline under $30.00 before initiating new shorts. We have two targets. Our first target is the $27.25-27.00 zone. Our second target is the $25.25-25.00 range. FYI: It's important to note that the most recent data puts short interest at almost 19% of the 68-million share float. That is a high degree of short interest and raises the risk of a short squeeze.

Picked on December 12 at $30.67
Change since picked: + 0.00
Earnings Date 01/24/08 (unconfirmed)
Average Daily Volume: 1.9 million
 

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