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New Plays
Long Plays
Short Plays
IMN None
JAKK  

Play Editor's Note: We strongly debated not adding any new plays this weekend. A number of professional traders have gone to all cash or if they are trading they're trading very small positions. I continue to stress that the best trade here is probably no trade at all. Sitting out on the sidelines is perfectly fine. The prevailing wisdom is that congress will eventually come to some sort of agreement on the bailout plan before Monday morning. However, there is a large camp of investors and market pundits who are calling it a coin toss whether or not an agreement is reached. No agreement on Monday means more volatile and probably more losses by the end of the day.

Please note that if/when an agreement on the bailout plan is reached I do expect a bounce but I don't expect the bounce to last very long. The rescue effort doesn't change the underlying economic environment, which is slowing. I would be watching very closely to short the bounce as it begins to falter. We're still in a bear market. Furthermore the end of September could see a lot of selling from funds facing rising redemptions. They don't have to do all of their selling by September 30th. It could carry into the first few days of October.

FYI: Keep an eye on airline stock LCC. It has produced a bearish head-and-shoulders pattern that points to a $2.00 target. The P&F chart is bearish with a $2.50 target. The U.S. dollar is likely to roll over, which will push oil higher and thus airlines lower.


New Long Plays

Imation Corp. - IMN - cls: 23.25 change: +0.38 stop: 22.45

Company Description:
Imation is a leading global developer and marketer of branded offerings that enable people to capture, save and enjoy digital information. Our world-class portfolio of digital storage products, audio and video electronics, and accessories reaches customers through a powerful global distribution network. (source: company press release or website)

Why We Like It:
IMN is a relative strength play. While the NASDAQ was hitting new relative lows in mid September shares of IMN were slowly marching higher. Investors have been buying the dips in spite of this market turmoil. Now this doesn't mean that IMN won't reverse lower if the market crashes this week but it stocks bounce instead IMN could out perform. Friday's rebound and close above the simple 200-dma looks like a new bullish entry point. We will try and play with a relatively tight stop loss. Our target is $25.25. More aggressive traders may want to aim higher. FYI: IMN has a relatively high amount of short interest. The latest data listed short interest at almost 19% of the small 29 million-share float. That puts IMN at risk for a short squeeze.

Picked on September 28 at $23.25
Change since picked: + 0.00
Earnings Date 10/21/08 (unconfirmed)
Average Daily Volume: 335 thousand

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JAKKS Pacific - JAKK - close: 25.91 change: +0.57 stop: 24.99

Company Description:
JAKKS Pacific, Inc. is a leading designer and marketer of toys and consumer products, with a wide range of products that feature some of the most popular children's toy licenses in the world. (source: company press release or website)

Why We Like It:
JAKK is another "go with the trend" play. The stock has been sort of stair-stepping higher with a clear line of support (see chart). Traders bought the dip at $25.00 last week, which provides a good spot to place our stop loss. If the market is positive it looks like JAKK could rally past $27.00 to new relative highs. We're setting our first target at $27.95. More aggressive traders may want to aim higher. FYI: The most recent data listed short interest at 16% of the small 26.6 million-share float, which raises the odds for a short squeeze. The Point & Figure chart is bullish with a $40.00 target.

Picked on September 28 at $25.91
Change since picked: + 0.00
Earnings Date 10/22/08 (unconfirmed)
Average Daily Volume: 407 thousand
 

New Short Plays

None today.
 

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