NEW BEARISH Plays

ConAgra Foods - CAG - close: 33.69 change: -0.70

Stop Loss: 35.05
Target(s): 30.15
Current Gain/Loss: unopened

Entry on June -- at $--.--
Listed on June 01, 2013
Time Frame: Exit PRIOR to earnings on June 27th
Average Daily Volume = 2.8 million
New Positions: Yes, see below

Company Description

Why We Like It:
CAG, a Nebraska-based food company, is nearly 100 years old. The stock delivered an impressive first quarter rally but since then the upward momentum has stalled. CAG appears to have produced a bearish double top with the peaks in April and May. Now the stock has begun correcting lower. Friday's drop saw a breakdown under its 100-dma and what should have been support near $34.00.

We are suggesting bearish positions now at current levels. Nimble traders could wait for an oversold bounce and maybe a failed rally near $34.50, which looks like potential short-term resistance. Our target is $30.15. However, we will plan on exiting positions prior to CAG's earnings report on June 27th.

Suggested Position: short CAG stock @ (the open)

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

Buy the Jul $33 PUT (CAG1320S33) current ask $0.75

Annotated chart:



Safeway Inc. - SWY - close: 23.01 change: -0.28

Stop Loss: 23.75
Target(s): 20.00
Current Gain/Loss: unopened

Entry on June -- at $--.--
Listed on June 01, 2013
Time Frame: 6 to 8 weeks
Average Daily Volume = 4.4 million
New Positions: Yes, see below

Company Description

Why We Like It:
SWY is another bearish candidate related to food and groceries. This company runs a chain of grocery stores with over 1,600 locations. The stock crashed back in late April in reaction to its disappointing earnings report. The oversold bounce has now failed about two weeks ago. Today SWY is flirting with support at its simple 100-dma. We suspect the down trend continues.

I am suggesting a trigger to launch bearish positions at $22.90. As an alternative you could wait for a drop under the May 23rd low (22.70) or under the late April lows (22.30). Our target is $20.00 (or the simple 200-dma).

I am suggesting we keep our position size small because the most recent data listed short interest at 23% of the 234 million-share float. That does raise the risk of a short squeeze. You could try and limit your risk by trading the options.

NOTE: as an alternative you may want to check out SWY's rival Kroger (KR). Shares of KR are also starting to pullback from its highs.

Trigger @ 22.90 *Small Positions*

Suggested Position: short SWY stock @ (trigger)

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

Buy the Jul $23 PUT (SWY1320S23) current ask $1.40

Annotated chart: