Editor's Note:

In addition to tonight's new candidate, consider these stocks as possible trading ideas and watch list candidates:

(bullish ideas) AEM, CRUS, JACK, CAKE, MTGE, BMC

(bearish ideas) PHG, CE, RAIL, INFI, SIMO, NXTM, CVGI


NEW BEARISH Plays

Ebix, Inc. - EBIX - close: 18.20 change: -0.48

Stop Loss: 19.05
Target(s): 16.05
Current Gain/Loss: unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
EBIX specializes in on-demand software solutions for the insurance industry. The stock has been in a bearish trend since it peaked in February. Shares failed to participate in the market's big bounce yesterday and failed to participate in the market's afternoon rebound today. I suspect we will see EBIX break support at $18.00 soon.

I am suggesting a trigger to open bearish positions at $17.90 with a stop loss at $19.05. Our first target is $16.15. We want to keep our position size small to limit our risk because EBIX could see a short squeeze. The most recent data listed short interest at 29% of the small 34.6 million share float. Readers may want to use put options to limit risk instead of shorting the stock.
FYI: The Point & Figure chart for EBIX is bearish with a $12.00 target.

Trigger @ 17.90

Suggested Position: short EBIX stock @ (trigger)

- or -

buy the JUN $18 PUT (EBIX1216R18) current ask $0.75

Annotated chart:

Entry on May xx at $ xx.xx
Earnings Date 08/07/12 (unconfirmed)
Average Daily Volume = 386 thousand
Listed on May 23, 2011