Editor's Note:

After five weekly declines in a row it might be time for the market to bounce but the overall trend is turning negative. These stocks caught my eye this weekend.

Andersons Inc. (ANDE) just broke down under its 200-dma after a two-week consolidation in the $41.50-44.00 range.

Urban Outfitters Inc. (URBN) is on the verge of breaking down under its 2010 and 2011 lows near $29.00. Shares already look a little oversold but a breakdown would be very bearish.

Akamai Technologies (AKAM) is struggling with a trend of lower highs and lower lows and looks headed for the $30 area.

Du Pont (DD) is nearing round-number support at $50 and technical support at its 200-dma. A breakdown under this level could be a bearish entry point.

- James


NEW BEARISH Plays

AO Smith Corp. - AOS - close: 39.40 change: -0.84

Stop Loss: 42.05
Target(s): 36.00, 33.00
Current Gain/Loss: + 0.0%
Time Frame: 6 to 8 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
AOS makes water heating products for both the residential and commercial markets. It would appear that the bull market for AOS has run its course. Shares have seen an impressive run from their 2009 lows but the stock has now broken its long-term trend line of support. In the last two weeks the oversold bounce has failed and AOS is back under technical support at the 200-dma and price support near $40.

I am suggesting bearish positions now with a stop loss at $42.05. More conservative traders could put their stop above Wednesday's high of $41.52 instead. Our targets are $36.00 and $33.00.

FYI: The Point & Figure chart for AOS is bearish with a $33 target. Traders should also note that the most recent data listed short interest at 5% of the relatively small 38.2 million share float. That does raise the risk for a possible short squeeze and explains the volatile rallies in this stock.

NOTE: AOS does have options but the spreads appear too wide for us to trade them.

Suggested Position: short AOS stock @ current levels

Annotated chart:

Weekly chart:

Entry on June 6 at $xx.xx
Earnings Date 07/20/11 (unconfirmed)
Average Daily Volume: 312 thousand
Listed on June 4th, 2011


Target Corp. - TGT - close: 47.40 change: -0.55

Stop Loss: 50.15
Target(s): 45.15
Current Gain/Loss: unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see trigger

Company Description

Why We Like It:
Investors are growing concerned about the consumer and the future of retail again. The recent release of May same-store sales was not very encouraging. Most companies reported missed estimates. TGT saw +2.8% same-store sales in May versus estimates of +3.5%. The stock has broken down to new 52-week lows after weeks of consolidating sideways.

Aggressive traders may want to launch positions now. I suspect that TGT will see a little oversold bounce that will roll over under prior support. Thus I'm suggesting we use a trigger at $48.50 to launch bearish positions. If triggered we'll use a stop loss at $50.15. Our first target is $45.15. FYI: The Point & Figure chart for TGT is bearish with a $43 target.

Trigger @ 48.50

Suggested Position: short TGT stock @ 48.50

- or -

buy the July $47 PUT (TGT1116S47) current ask $1.24

Annotated chart:

Entry on June x at $xx.xx
Earnings Date 08/18/11 (unconfirmed)
Average Daily Volume: 7.1 million
Listed on June 4th, 2011