NEW BEARISH Plays

Simpson Manufacturing Co - SSD - close 26.89 change -0.13 stop 28.82

Company Description:
Simpson Manufacturing Co., Inc., through its subsidiary, Simpson Strong-Tie Company Inc. (SST), the Company designs, engineers and manufactures wood-to-wood, wood-to-concrete and wood-to-masonry connectors, SST Quik Drive screw fastening systems and collated screws, stainless steel fasteners, and pre-fabricated shear walls. SST Anchor Systems offers a line of adhesives, mechanical anchors, carbide drill bits and powder actuated tools for concrete, masonry and steel. SST is the Company’s connector products segment. The Company's subsidiary, Simpson Dura-Vent Company, Inc. (SDV), designs, engineers and manufactures venting systems for gas, wood, oil, pellet and other alternative fuel burning appliances. SDV is the Company's venting products segment. SST's Anchor Systems product line is included in the connector product segment. The Company markets its products to the residential construction, light industrial and commercial construction, remodeling and do-it-yourself (DIY) markets.

Target(s): 25.75, 25.35, 24.25
Key Support/Resistance Areas: 28.70, 27.75, 26.90, 26.00, 25.30, 24.00
Time Frame: 1 to 2 weeks

Why We Like It:
SSD hit a key resistance area near $28.70 on 6/14 and has retreated ever since. The stock is barely hanging on to its 200-day SMA and I believe it is poised to retest its June lows and possibly its late February lows near $24.00. The stock remains below its 20-day SMA and if the market continues lower form here we should easily hit our targets. Our stop is $28.82 which is above the highs from 6/14. My only concern is a possible inverse head and shoulders pattern on the daily chart. But if there is a bounce I believe it will be short lived considering today's bearish price action.

Suggested Position: Short SSD stock at current levels

Option Traders: Buy August $25.00 PUTS, current ask $1.25

Annotated chart:

Entry on June xx
Earnings 7/28/2010 (unconfirmed)
Average Daily Volume: 337,000
Listed on June 21, 2010