NEW BEARISH Plays

Rackspace Holdings - RAX - close: 38.01 change: -1.28

Stop Loss: 40.55
Target(s): 31.00
Current Gain/Loss: +0.0%

Entry on May 22 at $--.--
Listed on May 21, 2013
Time Frame: 6 to 8 weeks
Average Daily Volume = 3.0 million
New Positions: Yes, see below

Company Description

Why We Like It:
RAX provides hosting services and is also in the cloud computing industry. So far 2013 has not been a good year for RAX. The stock just collapsed a couple of weeks ago with a -20% gap down following a very disappointing earnings report. We've just seen the oversold bounce reverse and now RAX is hitting new 52-week lows. The company is facing a lot of competition in the cloud computing arena and it showed in the latest earnings report.

I am suggesting new bearish positions at the opening bell tomorrow. Our target is $31.00. FYI: The Point & Figure chart for RAX is bearish with a $24.00 target.

If you're concerned about shorting RAX then buy the put option to limit your risk to the cost of your option.

Suggested Position: short RAX stock @ (the open)

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

buy the Jun $37.50 PUT (RAX1322r37.5) current ask $1.60

Annotated chart: