Editor's Note:

My market bias remains bearish. Today is just an oversold bounce and the bounce could last two or three days. Then we'll look for stocks to roll over again. If you disagree and you're looking for bullish candidates then check out these symbols. Traders might see a bullish trade in these soon: CVC, EXPE, JNJ, WAG.

- James


NEW BEARISH Plays

Cabot Microelectronics - CCMP - close: 47.17 change: +1.25

Stop Loss: 50.05
Target(s): 45.15 & 200-dma
Current Gain/Loss: unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see trigger

Company Description

Why We Like It:
Semiconductor stocks saw a strong oversold bounce today. CCMP managed a +2.7% gain but the overall trend still looks vulnerable. CCMP should have resistance at broken support near $48.00 and at the 100-dma. I am suggesting we launch bearish positions at $47.90 with a stop loss at $50.05. If triggered our first target is $45.15, near the March low. Let's keep our position size small to limit our risk. Traders need to be aware that the most recent data listed short interest at 15% of CCMP's very small 22.5 million share float. This significantly raises the risk of a short squeeze. Readers may want to only play the put options instead to limit risk.

Trigger @ $47.90

Suggested Position: short CCMP stock @ 47.90

- or -

buy the July $45 PUT (CCMP1116S45) current ask $0.95 (these will be a little cheaper at our entry point)

Annotated chart:

Weekly chart:

Entry on June x at $xx.xx
Earnings Date 07/28/11 (unconfirmed)
Average Daily Volume: 141 thousand
Listed on June 14th, 2011