NEW BEARISH Plays

Allegheny Technologies - ATI - close: 58.62 change: +0.19

Stop Loss: 62.05
Target(s): 52.75, 50.50
Current Gain/Loss: unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see trigger

Company Description

Why We Like It:
ATI manufacturers specialty metals around the world and with investors worried about a global slowdown the stock is sinking. Shares just fell toward their simple 200-dma. A breakdown under this support level would be very bearish. I am suggesting a trigger to launch bearish positions at $57.40. I am actually expecting the market to bounce on Monday or Tuesday this week so ATI could bounce back toward resistance near $62.00. Officially our trigger to open positions is $57.40 but if we see an entry point near $62.00 we'll reconsider launching bearish positions there.

If ATI does hit our trigger at $57.40 I'm suggesting a stop loss at $62.05. Our targets are $52.75 and $50.50. We do not want to hold over the late July earnings report.

Trigger @ $57.40 (but keep watch for a failed rally near $62.00 as an alternative entry point).

Suggested Position: Short ATI stock @ $57.40

- or -

buy the July $55 PUT (ATI1116S55) current ask $1.60

Annotated chart:

Entry on June x at $xx.xx
Earnings Date 07/27/11 (unconfirmed)
Average Daily Volume: 1.9 million
Listed on June 18th, 2011


F5 Networks - FFIV - close: 97.20 change: +2.89

Stop Loss: 108.05
Target(s): 95.75, 85.50
Current Gain/Loss: unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see trigger

Company Description

Why We Like It:
Big cap tech names are getting hammered. Technically FFIV isn't quite large enough to be considered a "big cap" stock but it's close. It's still a high-profile tech name. Shares of FFIV broke down through several layers of support in the last couple of weeks. The trend has turned bearish again. I don't want to chase it here. There is a decent chance that the market will bounce early this week and we want to be ready to use the bounce as a new bearish entry point.

I am suggesting we launch positions at $103.00, just under technical resistance at the 50-dma. More conservative traders could wait for a bounce to $104.00 or even $105.00 as an alternative entry point. If triggered we'll use a stop loss at $108.05. Our targets are $95.75 and $85.50. However, we do not want to hold over the late July earnings report. FYI: The Point & Figure chart for FFIV is bearish with a $78 target.

Trigger @ $103.00

Suggested Position: Short FFIV stock @ 103.00

- or -

buy the July $100 PUT (FFIV1116S100) current ask $6.80. This will be a lot cheaper when FFIV bounces to our entry point.

Annotated chart:

Entry on June x at $xx.xx
Earnings Date 07/20/11 (unconfirmed)
Average Daily Volume: 2.3 million
Listed on June 18th, 2011