NEW BEARISH Plays

Eaton Corp. - ETN - close: 48.38 change: -0.31

Stop Loss: 50.75
Target(s): 42.50
Current Gain/Loss: + 0.0%
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
The oversold bounce in ETN is stalling near resistance in the $49-50 area as well as technical resistance at the 200-dma. This looks like an entry point to launch bearish positions. More conservative traders could wait for a failed rally closer to $50.00 instead. I'm suggesting a stop loss at $50.75, just over the 50-dma. Our downside target is $42.50. FYI: The Point & Figure chart for ETN is bearish with a $36 target.

Suggested Position: short ETN stock @ current levels

- or -

buy the July $47.50 PUT (ETN1116S47.5) current ask $1.00

- or -

buy the Aug. $45 PUT (ETN1120T45) current ask $1.25

Annotated chart:

Entry on June 23 at $xx.xx
Earnings Date 07/20/11 (unconfirmed)
Average Daily Volume: 3.8 million
Listed on June 22, 2011