NEW BEARISH Plays

The Children's Place - PLCE - close: 43.47 change: -1.29

Stop Loss: 45.15
Target(s): 40.15
Current Gain/Loss: + 0.0%
Time Frame: 6 to 8 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
PLCE is a specialty retailer focused on children's apparel. The stock seems to be in a new long-term trend of lower highs and lower lows. When they last reported earnings in mid May, PLCE's management guided lower for the second quarter. Now today's -2.8% drop has broken key support near $44.00. The next level of support is the $40.00 level.

Let me caution you that this is probably a higher-risk trade merely because being short PLCE is a popular bet. The most recent data listed short interest at 22% of the very small 19.7 million-share float. Thus, if the stock were to suddenly move higher, it could spark some short covering.

I am suggesting small bearish positions at the open tomorrow. We'll use a stop at $45.15. Our target is $40.15.
FYI: The Point & Figure chart for PLCE is bearish with a $36.00 target.

*Small Positions*

Suggested Position: short PLCE stock @ (the open)

- or -

buy the Jul $42.50 PUT (PLCE1221S42.5) current ask $1.80

Annotated chart:

Weekly chart:

Entry on June xx at $ xx.xx
Earnings Date 08/16/12 (unconfirmed)
Average Daily Volume = 529 thousand
Listed on June 13, 2011