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New Plays
Long Plays
Short Plays
None CCE
  MSO
  SBUX
  T

Play Editor's Note: Friday's sell-the-news reaction to the bailout bill's approval is not a good sign for stocks. It would appear that investors are still trying to sell on any strength. There has been some talk that the Federal Reserve might surprise the market with an inter-meeting rate cut next week. A rate cut is a potential risk for us since it could spark a short-covering rally. I wouldn't expect any rally to last too long but it could hit a lot of stop losses. Furthermore I need to point out that the VIX, while extremely elevated, can go higher. More importantly, the VIX is not usually this high for very long and these types of spikes in the VIX tend to mark bottoms in the stock market. Don't get married to your bearish positions.


New Long Plays

None today.
 

New Short Plays

Coca-Cola Enterp. - CCE - cls: 15.91 chg: -0.38 stop: 16.85

Company Description:
Coca-Cola Enterprises is the world's largest marketer, distributor, and producer of bottle and can liquid nonalcoholic refreshment. CCE sells approximately 80 percent of The Coca-Cola Company's bottle and can volume in North America and is the sole licensed bottler for products of The Coca-Cola Company in Belgium, continental France, Great Britain, Luxembourg, Monaco, and the Netherlands. (source: company press release or website)

Why We Like It:
CCE just spent three months trying to form a bottom and it looks like it failed. Shares broke down and closed under support near $16.00. The recent spike over $19.00 was a perfect failure at its retracement level. We're suggesting shorts with CCE under $16.00. Our first target is $14.05 and we suggest readers take most of their money off the table here. We are adding a second target at $12.50. FYI: We do not want to hold over the late October earnings report.

Picked on October 05 at $15.91
Change since picked: + 0.00
Earnings Date 10/23/08 (unconfirmed)
Average Daily Volume: 2.7 million

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MarthaStewardLivingOmni - MSO - cls: 7.78 chg: -0.30 stop: 8.75

Company Description:
Martha Stewart Living Omnimedia, Inc. is a diversified media and merchandising company, inspiring and engaging consumers with unique lifestyle content and distinctive products. (source: company press release or website)

Why We Like It:
MSO spent about two months trading sideways in the $7.85-9.00 zone and its one breakout higher quickly reversed. Now shares are slipping under support. Friday's move looks like a new entry point for shorts. More conservative traders may want to wait for a drop under the 200-dma near $7.67. We're suggesting positions now with a wide stop loss above Thursday's high. We have two targets. Our first target is $7.05. Our second target is $6.15.

Picked on October 05 at $ 7.78
Change since picked: + 0.00
Earnings Date 11/03/08 (unconfirmed)
Average Daily Volume: 496 thousand

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Starbucks - SBUX - close: 13.66 change: -0.51 stop: 15.01

Company Description:
Since 1971, Starbucks Coffee Company has been committed to ethically sourcing and roasting the highest quality arabica coffee in the world. Today, with stores around the globe, the company is the premier roaster and retailer of specialty coffee in the world. (source: company press release or website)

Why We Like It:
SBUX has been in a bearish trend for a couple of years now. We've played it before and Friday's breakdown under support near $14.00 looks like another entry point for bearish positions. However, I want to note that this might be an aggressive entry point since SBUX could bounce from its July lows near $13.33. Of course the stock has been setting a pattern of lower lows and we expect that to continue. Consumer spending is slowing. Commodities prices are still high. The two factors together are bad news for SBUX. There has been some suggestion that SBUX might be forced to cut prices to keep up sales volume. If you're a struggling consumer, how many $4 cups of coffee are you going to be drinking in the fourth quarter? We have two targets. Our first target is $12.05. Our second, multi-week target is $10.25.

Picked on October 05 at $13.66
Change since picked: + 0.00
Earnings Date 11/10/08 (unconfirmed)
Average Daily Volume: 12.2 million

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AT&T Inc. - T - close: 28.12 change: +0.15 stop: 29.55

Company Description:
AT&T Inc. is a premier communications holding company. Its subsidiaries and affiliates, AT&T operating companies, are the providers of AT&T services in the United States and around the world. (source: company press release or website)

Why We Like It:
News that telecom giant AT&T was being affected by the credit crisis took the wind out of the company's sales on Friday. Not that T was seeing sailing along very smoothly to begin with. The stock is already in a bearish trend after breaking support near $30.00 several days ago. The company is struggling to sell its short-term debt as investors begin to refocus on the slowing economy the stock is likely to continue lower. We're suggesting shorts in the $29-27.50 zone with a target at $25.05.

Picked on October 05 at $28.12
Change since picked: + 0.00
Earnings Date 10/22/08 (confirmed)
Average Daily Volume: 29.1 million
 

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