NEW BEARISH Plays

Corrections Corp. of America - CXW - close: 20.67 chg: -0.33 stop: 21.26

Company Description:
CCA founded the private corrections management industry more than 25 years ago, establishing industry standards for future-focused, forward-thinking correctional solutions. A commitment to innovation, efficiency, cost effectiveness and achievement has made the company the private corrections management provider of choice for federal, state and local agencies since 1983. CCA houses approximately 75,000 offenders and detainees in more than 60 facilities, 44 of which are company-owned, with a total bed capacity of more than 80,000. CCA currently partners with all three federal corrections agencies (The Federal Bureau of Prisons, the U.S. Marshals Service and Immigration and Customs Enforcement), nearly half of all states and more than a dozen local municipalities. (source: company press release or website)

Why We Like It:
CXW reported earnings back in February and the company guided earnings lower for both the Q1 and the year. What happened next? The stock exploded higher for the next three weeks. Now that rebound has run out of steam. Shares have been consolidating sideways around its 50-dma and 200-dma. Speaking of which the 50-dma just crossed under the 200-dma, which has been affectionately nicknamed the "death cross" because it is such a bearish signal.

CXW has not been participating in the market's recent rally and today the stock produced a bearish reversal pattern. I want to see some confirmation. Therefore I'm suggesting a trigger to open bearish positions at $19.90. If triggered our target is $18.00. The low in February 2010 was $17.50.

Trigger to open bearish positions at $19.90

Suggested Position: SHORT CXW stock @ 19.90 (unopened)

Annotated chart:

Entry on March xx at $xx.xx
Earnings Date 05/06/10 (unconfirmed)
Average Daily Volume: 1.1 million
Listed on March 17th, 2010