NEW BEARISH Plays

Hewlett Packard - HPQ - close: 18.61 change: -0.49

Stop Loss: 20.15
Target(s): 16.50
Current Gain/Loss: unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
HPQ looks like it's in a tailspin and can't pull up. The combination of slowing or flat PC sales don't help. An economic slowdown across the U.S., Europe and China doesn't help. A rising dollar puts pressure on profits. The company is facing a lot of headwinds.

I am suggesting a trigger to open bearish positions at $18.40. If triggered our target is $16.50. More aggressive traders could aim lower but the 2004 low was $16.08 so the $16.00 level could be support.
FYI: The Point & Figure chart for HPQ is bearish with a $7.00 target.

Trigger @ 18.40

Suggested Position: short HPQ stock @ (trigger)

- or -

buy the Aug $18 PUT (HPQ1218T18) current ask $0.43

Annotated chart:

Entry on July xx at $ xx.xx
Earnings Date 08/22/12 (unconfirmed)
Average Daily Volume = 18.0 million
Listed on July 21, 2011


MGM Resorts - MGM - close: 9.78 change: -0.54

Stop Loss: 10.51
Target(s): 8.10
Current Gain/Loss: unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
Investors have been selling rallies in MGM. Now this casino/resort stock has developed a bearish pattern of lower highs. The most recent oversold bounce just failed at resistance near $10.50. Shares have found recent support in the $9.75-9.70 zone. I am suggesting a trigger to open bearish positions at $9.69. The challenge is where do we target an exit?

Looking at a weekly chart you will see significant support near $9.00. Yet 2011 saw a spike down to $7.40 and the Point & Figure chart for MGM is bearish with a $5.00 target.

I am suggesting we aim for $8.10. I do consider this an aggressive trade because our stop loss is so wide.

Trigger @ $9.69

Suggested Position: short MGM stock @ (trigger)

- or -

buy the Aug $9.00 PUT (MGM1218T9) current ask $0.22

Annotated chart:

Entry on July xx at $ xx.xx
Earnings Date 08/07/12 (confirmed)
Average Daily Volume = 8.9 million
Listed on July 21, 2011