NEW BEARISH Plays

Halcon Resources - HK - close: 9.98 change: -0.26

Stop Loss: 10.70
Target(s): 8.00
Current Gain/Loss: unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
The recent 1:3 reverse stock split in shares of HK was good news for the bears. Now they have something to short again in shares of HK. The stock peaked almost four weeks ago and is sinking under a new trend of lower highs. Now HK is flirting with a breakdown under what could have been round-number support at $10.00.

There is already relatively high short-interest so I am suggesting small positions. We will use a trigger to open bearish positions at $9.75 with a stop loss at $10.70. Our target is $8.00. More aggressive traders could target the 100-dma instead.

Trigger @ 9.75

Suggested Position: short HK stock @ 9.75

Annotated chart:

Entry on March xx at $ xx.xx
Earnings Date 03/05/12 (confirmed)
Average Daily Volume = 1.7 million
Listed on March 07, 2011


True Religion Apparel, Inc. - TRLG - close: 25.25 change: -0.30

Stop Loss: 26.55
Target(s): 22.25
Current Gain/Loss: + 0.0%6
Time Frame: 6 to 8 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
February was not a good month for TRLG. The company reported earnings that missed estimates, revenues missed estimates, and management guided lower. The news sparked several analyst downgrades. Shares collapsed. Now after three weeks of consolidating sideways above the $26.00 level TRLG is breaking down again.

I am suggesting small bearish positions at the opening bell tomorrow with a stop loss at $26.55. More conservative traders may want to wait for TRLG to trade under the October 2011 low of $24.86 before initiating positions. Our multi-week target is $22.25. FYI: The Point & Figure chart for TRLG is bearish with a long-term $14.00 target.

Initiate positions at the Open

Suggested Position: short TRLG stock @ (the open)

- or -

buy the Apr $25 PUT (TRLG1221P25) current ask $1.35

Annotated chart:

Entry on March xx at $ xx.xx
Earnings Date 04/26/12 (unconfirmed)
Average Daily Volume = 924 thousand
Listed on March 07, 2011