NEW BEARISH Plays

SanDisk Corp - SNDK - close 40.07 change +0.63 stop 42.20

Company Description:
SanDisk Corporation (SanDisk) is engaged in designing, developing and manufacturing data storage solutions in a range of form factors using the flash memory, controller and firmware technologies. The Company’s solutions include removable cards, embedded products, universal serial bus (USB) drives, digital media players, wafers and components.

Target(s): 38.15, 37.10, 35.60
Key Support/Resistance Areas: 41.00 to 40.00, 38.00, 36.00
Time Frame: 1 to 2 weeks

Why We Like It:
SNDK has rallied right into a prior support level in the $40 to $41 area which was a shelf before the stock cratered in August. This is the first time the stock has rallied back to test the prior support level and I expect it to act as resistance. Further, the stock has rallied right into a primary downtrend line which should provide additional resistance. Nimble traders may want to time a bounce of another 50 cents or so higher (near $40.65) but I'm not convinced we will get it. I suggest we open positions at current levels and target a $2 to $3 move lower, which is -5% to -7.5% lower than current levels.

Suggested Position: Short SNDK stock

Annotated chart:

Entry on October xx
Earnings: 10/21/10 (unconfirmed)
Average Daily Volume: 11 million
Listed on October 12, 2010