NEW BULLISH Plays
MetroPCS Communications - PCS - close 8.39 change -0.15 stop 7.80
MetroPCS Communications, Inc. (MetroPCS) is a wireless telecommunications provider. The Company offers wireless broadband mobile services under the MetroPCS brand in selected metropolitan areas in the United States over its own licensed networks or networks of entities, in which the Company holds a substantial non-controlling ownership interest. The Company provides a variety of wireless communications services to its subscribers on a no long-term contract, paid-in-advance, flat-rate, unlimited usage basis. As of January 2010, it offers service plans on a flat-rate basis inclusive of applicable taxes and regulatory fees. As of December 31, 2009, the Company had over 6.6 million subscribers. (source: company press release or website)
Target(s): 9.00, 9.25
Key Support Areas: 8.18, 8.05, 7.85
Key Resistance Areas: 8.62, 8.90
Time Frame: 1 to 2 weeks
Why We Like It:
PCS has shown relative strength while the overall market has declined in recent weeks. There was major volatility during the flash crash in this stock which appears to have shaken out the weak hands. The stock has responded nicely since and bounced off of its 20-day SMA on Friday. I'm playing for a bounce in PCS along with the overall market and I suggest readers initiate long positions if PCS retests its lows from Friday near $8.20. If the market bounces from here I think PCS is poised to retest its recent highs, which are near our targets of $9.00 and $9.25. We'll use tight a stop at $7.80, which is below a gap fill from 5/10 to 5/11. I also like the 2:1 risk/reward set-up of this trade: we are risking 40 cents to make 80 cents, and possibly $1.05.
Suggested Position: Long PCS stock at if it trades down near $8.20
Entry on May xx
Earnings Date More than 2 months (unconfirmed)
Average Daily Volume: 9.6 million
Listed on 5/22/10, 2010
NEW BEARISH Plays
Royal Caribbean - RCL - close 28.34 change +0.58 stop 31.50
Royal Caribbean Cruises Ltd. (Royal Caribbean) is a cruise company. As of December 31, 2009, it operated 38 ships in the cruise vacation industry with approximately 84,050 berths. The Company owns five cruise brands, Royal Caribbean International, Celebrity Cruises, Pullmantur, Azamara Club Cruises, and CDF Croisieres de France. In addition, Royal Caribbean has a 50% investment in a joint venture with TUI AG, which operates the brand TUI Cruises. Its cruise brands primarily serve the contemporary, premium and up-market segments of the cruise vacation industry. The Companyâ€™s ships operate worldwide in approximately 400 destinations. Royal Caribbean has offices in the United Kingdom, Germany, Norway, Italy, Spain, Singapore, China, Brazil and Australia.
Target(s): 25.05, 24.05
Key Support Areas: 27.40, 25.00
Key Resistance Areas: 28.85, 29.80
Time Frame: Several Weeks
Why We Like It:
RCL has been pummeled over the last couple of weeks and I believe there is more downside in the stock's future. The stock has broken an upward trend line that started on 7/8/09 and is ever so close to breaking its longer term upward trend line that started on 3/3/09. I suggest readers take advantage of the weakness and initiate short positions on any bounces or if the stock trades down to $27.35 first. Ideally I would like to see RCL rally to close the gap down from 5/19 to 5/20 near $29.70. This would provide an ideal entry point for a short position which is near its recent down trend line and would also constitute a back test of the broken upward trend line previously mentioned. A slightly lower entry point could also be $28.85 which is near the highs of the past 2 days. If RCL breaks below $27.38 (Friday's low) I believe the stock should see $25.05 in short order which is our first target. Our second more aggressive target is $24.05. Our initial stop will be $31.50 and our time frame is several weeks.
Suggested Position: Short RCL stock if it trades up near $29.70, or if it trades to $27.35 - whichever occurs first.
Suggested Position: Buy JUNE $28.00 PUT, current ask $2.10
Entry on May xx
Earnings More than 2 months (unconfirmed)
Average Daily Volume: 4.5 million
Listed on May 22, 2010