NEW BEARISH Plays

Ctrip.com Intl. - CTRP - close: 22.44 change: -0.51

Stop Loss: 24.05
Target(s): 20.25
Current Gain/Loss: unopened
Time Frame: up to earnings in mid February.
New Positions: Yes, see below

Company Description

Why We Like It:
The last three quarters have been pretty ugly for shares of CTRP, a travel services company focused on China. Now the stock's recent oversold bounce has failed and shares are breaking down to new lows.

I do want to warn you that short interest on CTRP is nearing 10% of the float, which raises the risk of a short squeeze. I am suggesting we keep our position size small to limit our risk. We want to open bearish positions at the open tomorrow. More conservative traders can wait for a new relative low under $22.00 as their entry point instead. Our exit target is $20.25. I'm starting this play with a wide stop loss (a.k.a. riskier stop loss) at $24.05. FYI: The Point & Figure chart for CTRP is bearish with a $9.00 target.

Small Positions

Suggested Position: short CTRP stock @ the open

- or -

buy the Feb $22 PUT (CTRP1218N22) current ask $1.45

Annotated chart:

Entry on January xx at $ xx.xx
Earnings Date 02/13/12 (unconfirmed)
Average Daily Volume = 1.8 million
Listed on January 09, 2011


Focus Media Holdings - FMCN - close: 18.71 change: +0.08

Stop Loss: 20.51
Target(s): 15.50
Current Gain/Loss: + 0.0%
Time Frame: 6 to 8 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
FMCN is another Chinese company. This one is in the advertising industry. There were headlines about FMCN last week when Muddy Waters LLC, a research firm focused on Chinese companies, alleged there was something fishy about FMCN's recent acquisition of a ginseng plantation. Investors have to wonder why an advertising company is buying plantations. The company (FMCN) denies there was any wrongdoing. Shares still look vulnerable to more selling pressure.

The stock has a bearish trend of lower highs and closed under recent support near $19.00. I am labeling this an aggressive trade because FMCN can be a volatile stock. We want to keep our position size small to limit our risk. Open bearish positions tomorrow morning. We'll use a stop loss at $20.51. Our target is $15.50. FYI: The Point & Figure chart for FMCN is currently bullish but a drop under $18.00 will create a new sell signal.

NOTE: Using the put options can limit your capital exposure.

(Small Positions)

Suggested Position: short FMCN stock @ the open

- or -

buy the Feb $18 PUT (FMCN1218N18) current ask $1.80

Annotated chart:

Entry on January xx at $ xx.xx
Earnings Date 03/06/12 (unconfirmed)
Average Daily Volume = 2.7 million
Listed on January 09, 2011