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New Plays
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New Plays
Long Plays
Short Plays
WMB PAYX
WMT  

Play Editor's Note: A couple of stocks that caught my eye but didn't quite make the cut tonight were Allstate (ALL) and Sirius (SIRI). Traders could buy ALL with a tight stop under today's low. I would target resistance the $53.00-54.00 zone. My concern is technical resistance at the 200-dma. Shares of SIRI might have found a very short-term bottom today. Nimble traders could buy SIRI here with a tight stop around $2.54 and target the 100-dma in the $2.80-2.82 zone. My concern with SIRI is the volatility and the potential for a negative headline regarding its proposed merger with XMSR.


New Long Plays

Williams Cos. - WMB - close: 38.40 change: -0.63 stop: 36.99

Company Description:
Williams, through its subsidiaries, finds, produces, gathers, processes and transports natural gas. Williams' operations are concentrated in the Pacific Northwest, Rocky Mountains, Gulf Coast, and Eastern Seaboard. (source: company press release or website)

Why We Like It:
Shares of WMB, a natural gas company, hit new highs yesterday. The stock pulled back today as investors continued to take profits in the energy sector. Yet natural gas did not pull back the same way crude oil did so WMB may have been unfairly punished here. Traders were buying the dip near $38.00 around previous resistance so this late day bounce from its 10-dma looks like a new entry point to buy the stock. Our biggest concern is that WMB might be caught up in a widespread energy sector sell-off if oil slips again even though natural gas is holding up. We debated on where to put the stop loss. We were tempted to put the stop under today's low (37.84) and we considered putting it at 37.49 but choose 36.99 to give WMB some room to maneuver. You may want to use a tighter stop. If WMB doesn't not bounce tomorrow we may exit early anyway just to cut our losses. Our target is the $42.00-42.50 zone. More aggressive traders may want to aim higher. The Point & Figure chart points to $56.

Picked on May 22 at $38.40
Change since picked: + 0.00
Earnings Date 07/31/08 (unconfirmed)
Average Daily Volume: 6.7 million

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Wal-Mart - WMT - close: 56.05 change: +0.82 stop: 54.95

Company Description:
Wal-Mart Stores, Inc. operates Wal-Mart discount stores, supercenters, Neighborhood Markets and Sams Club locations in the United States. The Company operates in Argentina, Brazil, Canada, China, Costa Rica, El Salvador, Guatemala, Honduras, Japan, Mexico, Nicaragua, Puerto Rico and the United Kingdom. (source: company press release or website)

Why We Like It:
WMT was a big out performer in March and April and now the stock has spent the better part of May digesting those gains. If you look at many of the short-term technicals the trend is bearish so this should be considered an aggressive, higher-risk entry point. We'll try and limit our risk with a tight stop loss. WMT bounced from support near $55.00 and its rising 50-dma so there is a clear level of support we can stick our stop loss under. Our short-term target is the $59.00 level near its recent highs. More aggressive traders may want to aim higher. The Point & Figure chart points to a $68 target. We are going to tentatively set a secondary, aggressive target at $62.50 but we suggest readers take some money off the table at $59.00.

Picked on May 22 at $56.05
Change since picked: + 0.00
Earnings Date 08/14/08 (unconfirmed)
Average Daily Volume: 19.1 million
 

New Short Plays

Paychex Inc. - PAYX - close: 34.87 change: -1.29 stop: 36.81

Company Description:
Paychex, Inc. is a leading provider of payroll, human resource, and benefits outsourcing solutions for small- to medium-sized businesses. (source: company press release or website)

Why We Like It:
After several weeks of consolidating sideways PAYX broke down sharply and fell through multiple levels of support, including its 50-dma, on strong volume today. We are suggesting readers open bearish positions now. However, if you're patient, our preferred entry point would be a bounce or failed rally in the 35.25-35.75 zone. We're starting the play with a stop loss at $36.81. More conservative traders might want to consider a stop closer to $36.00. PAYX may find some support near $34.00 and its 100-dma so expect a short-term bounce. Our target is the $31.00-30.00 zone. The P&F chart is actually still bullish at least for now. FYI: The most recent data listed short interest at 5% of the 320 million-share float. That's several days worth of short interest.

Picked on May 22 at $34.87
Change since picked: + 0.00
Earnings Date 06/25/08 (unconfirmed)
Average Daily Volume: 2.4 million
 

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