NEW BEARISH Plays

InterDigital, Inc. - IDCC - close: 24.36 change: -0.83

Stop Loss: 25.55
Target(s): 21.50
Current Gain/Loss: unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
IDCC is in the wireless technology industry. Unfortunately the stock seems to be in a long-term decline. News that IDCC raised its revenue guidance in early May was quickly sold. Now the recent oversold bounce is already rolling over.

I am suggesting bearish positions at the open tomorrow. We'll use a stop at $25.55. Our multi-week target is $21.50. More aggressive traders could aim for the $20 level instead.

Suggested Position: short IDCC stock @ (the open)

- or -

buy the Jul $22.50 PUT (IDCC1221S22.5) current ask $1.05

Annotated chart:

Entry on June xx at $ xx.xx
Earnings Date 07/25/12 (unconfirmed)
Average Daily Volume = 648 thousand
Listed on June 07, 2011


Polypore Intl. - PPO - close: 34.56 change: -1.41

Stop Loss: 36.85
Target(s): 30.25
Current Gain/Loss: unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
PPO is in the industrial goods sector. Some of its products end up in the hybrid vehicle and electric vehicle products. The stock has been churning sideways in the $34-40 zone for weeks. Yet it's most recent oversold bounce just reversed under its 50-dma into a bearish engulfing candlestick pattern.

I am suggesting small bearish positions now, at the open tomorrow, with a stop loss at $36.85, just above today's high. Our target is $30.25. More conservative traders will want to wait for PPO to breakdown to new relative lows under $33.60 before initiating positions. We want to keep our position size small because a lot of investors are already short this stock. The most recent data listed short interest at 33% of the 46.3 million share float. If something happens and PPO starts to suddenly show strength it could spark some short covering. Considering buying put options to limit your risk.

(SMALL Positions)

Suggested Position: short PPO stock @ (the open)

- or -

buy the Jul $32.50 PUT (PPO1221S32.5) current ask $2.10

Annotated chart:

Entry on June xx at $ xx.xx
Earnings Date 08/01/12 (unconfirmed)
Average Daily Volume = 1.2 million
Listed on June 07, 2011