NEW BEARISH Plays

Westport Innovations - WPRT - close: 33.81 change: -0.34

Stop Loss: 34.55
Target(s): 30.10
Current Gain/Loss: unopened

Entry on September xx at $ xx.xx
Listed on September 05, 2011
Time Frame: 3 to 4 weeks
Average Daily Volume = 798 thousand
New Positions: Yes, see below

Company Description

Why We Like It:
WPRT is in the business of low-emission fuel systems, essentially natural gas engines. After quite an impressive rally in 2011 and the first quarter of 2012 the stock has reversed sharply. Now the retracement higher is rolling over. WPRT has a bearish trend of lower highs and is chewing through support.

The August 24th low was $33.66. I am suggesting small bearish positions if WPRT can trade at $33.45 as our trigger. We will aim for $30.10 but more aggressive traders could aim lower. We do want to keep our position size small to limit our risk because WPRT does have a high amount of short interest. The most recent data listed short interest at 37% of the 40 million-share float. That does raise the risk of a short squeeze. Readers may want to consider limiting their risk by buying put options instead of shorting the stock. FYI: The Point & Figure chart for WPRT is bearish with a $28.00 target.

Trigger @ 33.45

Suggested Position: short WPRT stock @ (trigger)

- (or for more adventurous traders, try this option) -

buy the Oct $30 PUT (WPRT1220v30) current ask $1.10

Annotated chart: