NEW BEARISH Plays

iShares Russell 2000 - IWM - close 63.75 change +0.04 stop 49.15

Company Description:
iShares Russell 2000 Index Fund (the Fund) seeks investment results that correspond generally to the price and yield performance of the Russell 2000 Index (the Index). The Index measures the performances of the small-capitalization sector of the United States equity market. The Index is a float-adjusted capitalization-weighted index of equity securities issued by the approximately 2,000 smallest issuers in the Russell 3000 Index.

Target(s): 62.10, 60.75, 59.50, 58.75
Key Support/Resistance Areas: 64.50, 63.30, 62.60, 61.50, 60.70, 58.00
Time Frame: 1 to 2 weeks

Why We Like It:
IWM gapped up above our entry trigger and considering the overall strength the market it we refrained from entering short positions. However, I still like this short trade set-up and we have a much better risk/reward now. IWM is approaching resistance from below, a downtrend line and its declining 20-day SMA. This is a lot for the index to overcome and I believe it will reverse to at least retest its closing lows near $62.10. I suggest traders see how the market opens tomorrow and if it starts to rollover initiate short positions. On the other hand, if the market surges I would wait for a lower high to be made and then consider opening the short position. Our new stop will $65.75 and I have adjusted the option position to July This trade could be quick so I urge readers to protect profits if IWM is moving in our direction.

Suggested Position: Short IWM stock

Option Traders:
Suggested Position: Buy July $63.00 PUT, current ask $2.80

Annotated chart:

Entry on June xx
Earnings N/A (unconfirmed)
Average Daily Volume: 101 million
Listed on June 9, 2010


Altera Corp - ALTR - close 23.66 change +0.81 stop 24.25

Company Description:
Altera Corporation (Altera) is a semiconductor company. The Company designs, manufactures and markets programmable logic devices (PLDs), HardCopy application-specific integrated circuits (ASICs), pre-defined design building blocks, known as intellectual property (IP) cores, and associated development tools. Altera is a supplier of complementary metal oxide semiconductor (CMOS) PLDs. The Company’s PLDs consist of field-programmable gate arrays (FPGAs) and complex programmable logic devices (CPLDs), which are semiconductor integrated circuits, or chips, that its customers program to perform logic functions in their electronic systems. Its HardCopy ASICs enables its customer transition designs from FPGAs to non-programmable implementations. Altera’s IP cores can be licensed by customers to add functions to their PLD designs.

Target(s): 22.60
Key Support/Resistance Areas: 24.15, 23.80, 23.15
Time Frame: 1 to 2 weeks

Why We Like It:
ALTR is coming into resistance at the $23.80 level and may also be forming a bearish head and shoulders pattern. I like the semiconductor space to reverse lower and ALTR should follow. I suggest readers initiate short positions at current levels or an any strength in the stock. Our targets are $22.60 and $22.00. We'll use an initial stop $24.25 which sets up a good risk/reward if we are wrong. We will either be right or right out of the trade.

Suggested Position: Short ALTR stock

Option Traders:
Suggested Position: Buy July $24.00 PUT, current ask $1.30

Annotated chart:

Entry on June xx
Earnings 7/20/2010 (unconfirmed)
Average Daily Volume: 9.7 million
Listed on June 9, 2010