Editor's Note:

Bearish candidates were a dime a dozen on Friday. The challenge is finding a stock that did not look too oversold and still offered a decent risk-reward. The market is definitely short-term oversold. I think the best play right now is to wait for a bounce this week, possibly on Friday's jobs numbers but hopefully sooner and then open new put positions as the bounce starts to roll over.


NEW BEARISH Plays

Life Technologies - LIFE - close: 49.71 change: +0.33 stop: 52.01

Why We Like It:
Investors don't seem to care how good earnings were last quarter. They're using every rally as an opportunity to sell into strength. LIFE spiked higher on its earnings report after beating estimates by eight cents and guiding higher. Yet shares reversed. Now after breaking down earlier in the month this failed rally looks like a very clear bearish reversal signal and a chance for us to launch bearish positions.

Shares of LIFE are very overbought on a longer-term trend and way overdue for a correction. I'm suggesting bearish positions now with a stop loss above last week's high. Our first target is $45.25, just above possible support at the 200-dma. We will cautiously set a second target at $41.00 but I suggest exit the majority of the position at $45.25.

Annotated chart:

Entry on   January 30 at $47.91 
Change since picked:     + 0.00   			
Earnings Date          01/28/10 (confirmed)    
Average Daily Volume:       2.6 million 
Listed on   January 30, 2009    


J.M.Smucker CO - SJM - close: 60.07 change: -0.92 stop: 61.51

Why We Like It:
SJM actually has one of the stronger looking charts but on a short-term basis the stock is reversing. There has been a breakdown from the January trading range and support near $60 and the 50-dma looks like it's going to break. If that happens it could be a quick decline toward stronger support near $55.00.

I am suggesting a trigger to open bearish positions at $59.49. Our target is $55.15. More nimble traders could try and open positions in the $61.50-52.00 zone.

Annotated chart:

Entry on   January xx at $xx.xx <-- TRIGGER @ 59.49
Change since picked:     + 0.00   			
Earnings Date          02/24/10 (unconfirmed)    
Average Daily Volume:       698 thousand
Listed on   January 30, 2009    


Warner Chilcott - WCRX - close: 27.33 change: +0.75 stop: 29.31

Why We Like It:
WCRX doesn't report earnings until late February but the company issued positive earnings guidance on Friday. Shares spiked toward short-term resistance near $28.00 and its 30-dma and reversed. This failure at resistance looks like a new bearish entry point. Now that the company has already pre-announced better earnings there is no reason to hold the stock into the announcement. I am expecting a correction and if you look at a weekly chart you can see shares are very overbought.

I am suggesting bearish positions now. The stock can be a little volatile so let's keep positions smaller. We're listing the stock with a stop loss at $29.31 but more conservative traders may want to consider a tighter stop in the $28.20-28.30 zone. Our first target is $25.00. Our second target is $22.25.

Annotated chart:

Entry on   January 30 at $27.33 
Change since picked:     + 0.00   			
Earnings Date          02/26/10 (unconfirmed)    
Average Daily Volume:       1.3 million 
Listed on   January 30, 2009