NEW BEARISH Plays

Jack Henry & Associates Inc. - JKHY - close: 29.60 change: -0.54

Stop Loss: 30.70
Target(s): 28.10, 26.25
Current Gain/Loss: + 0.0%
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
JKHY is a business software and services company. The stock has been suffering with a bearish trend of lower highs. In just the last few days the simple 50-dma has crossed under the simple 200-dma, which is normally a very bearish signal. JKHY was also underperforming today with a -1.7% decline. I suspect we could see JKHY breakdown to new relative lows.

I am suggesting bearish positions now with a stop loss at $30.70. More conservative traders could try a tighter stop loss (maybe $30.45ish). Alternative you could wait for a drop under last week's lows near $29.50 before initiating positions. I do see potential support near $28.00 so we'll set our first target to take profits at $28.10. Our secondary target is $26.25. We do not want to hold over the mid August earnings report so the secondary target is unlikely to get hit.

NOTE: The option spreads are too wide to trade options on JKHY.

I would keep our position size small. If lawmakers do agree on a debt ceiling deal the entire market could rally.

- small positions -

Suggested Position: short JKHY @ current levels

Annotated chart:

Entry on July xx at $ xx.xx
Earnings Date 08/16/11 (unconfirmed)
Average Daily Volume = 427 thousand
Listed on July 26, 2011