NEW BEARISH Plays

Trulia, Inc. - TRLA - close: 29.46 change: -0.64

Stop Loss: 31.55
Target(s): 25.25
Current Gain/Loss: +0.0%

Entry on April -- at $--.--
Listed on April 29, 2013
Time Frame: exit PRIOR to earnings in mid-May
Average Daily Volume = 581 thousand
New Positions: Yes, see below

Company Description

Why We Like It:
TRLA is a website providing online services for real estate buyers, sellers, renters, and real estate agents. Normally spring and summer are the best time of year for real estate-related business. You would think as we approach summer that shares of TRLA might be heating up as investors expect a strong performance. Yet the stock is instead underperforming the market and breaking down below support at $30.00 and its 50-dma.

You probably noticed the big spike higher back in February. That was a reaction to TRLA raising its Q1 earnings guidance, which sparked a short squeeze. TRLA does have above average short interest. The most recent data listed short interest at 18% of the very small 20.4 million-share float. That does raise the risk of a short squeeze should TRLA suddenly reverse higher. You could try and limit your risk by buying a put option in TRLA instead of shorting the stock but right now the bid/ask spread on the May puts is rather wide and would put us at a significant disadvantage.

I am suggesting bearish positions immediately. Our short-term target is $25.25. More aggressive traders could aim lower.

Suggested Position: short TRLA @ (the open)

Annotated chart: