NEW BEARISH Plays

Timken Co. - TKR - close: 47.02 change: -1.26

Stop Loss: 50.25
Target(s): 45.05, 42.00
Current Gain/Loss: unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see trigger

Company Description:
The Timken Company keeps the world turning with innovative friction management and power transmission products and services, enabling its customers' machinery to perform more efficiently and reliably. With sales of $3.1 billion in 2009, operations in 27 countries/territories and approximately 17,000 employees, Timken is Where You Turn® for better performance. (source: company press release or website)

Why We Like It:
TKR reported earnings on January 27th. The company beat estimates by 3 cents, beat on revenues, and offered positive revenue guidance yet that wasn't enough. Traders have been selling the news following TKR's +62% rally off its August lows. The stock has broken several layers of support in the last few days.

Aggressive traders may want to open bearish positions now. I'd much rather wait for a bounce. I'm suggesting a trigger to open bearish positions at $48.00. You could wait for a rebound closer to $49.00. We'll set our stop loss at $50.25. Our exit targets are $45.05 and $42.00.

Trigger @ 48.00

Suggested Position: short TKR stock @ $48.00

- or -

Buy the March $45 puts (TKR1119O45)

Annotated chart:

Entry on February x at $xx.xx
Earnings Date 01/27/11 (confirmed)
Average Daily Volume: 857 thousand
Listed on January 31st, 2011