NEW BEARISH Plays

Charles Schwab - SCHW - close: 16.01 change: -0.03

Stop Loss: 17.55
Target(s): 15.25
Current Gain/Loss: unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see trigger

Company Description

Why We Like It:
Financial stocks have been market under performers in the month of June and some of the asset management names have seen significant breakdowns. SCHW is one of them with a breakdown under support near $17.00 and its 200-dma. We don't want to chase it at current levels, especially with the market looking oversold and due for a bounce.

I am suggesting we use a trigger to launch bearish positions at $16.75, near the 200-dma, which should be technical resistance. More conservative traders could wait for a failed rally under $17.00 instead before launching positions. If triggered we'll use a stop loss at $17.55 and aim for a drop to $15.25. This could take several weeks but we do not want to hold over the mid July earnings report.

Trigger @ 16.75

Suggested Position: short SCHW stock @ $16.75

- or -

Buy the July $17.00 PUT (SCHW1116S17) current ask $1.25 (this will be cheaper when SCHW bounces to our trigger)

Annotated chart:

Entry on June x at $xx.xx
Earnings Date 07/18/11 (unconfirmed)
Average Daily Volume: 10.2 million
Listed on June 13th, 2011