NEW BEARISH Plays

Ecopetrol SA - EC - close: 38.00 change: -0.85

Stop Loss: 39.05
Target(s): 31.00
Current Gain/Loss: unopened

Entry on December -- at $--.--
Listed on December 30, 2013
Time Frame: 6 to 8 weeks
Average Daily Volume = 716 thousand
New Positions: Yes, see below

Company Description

Why We Like It:
EC is a Columbian oil and gas company. The stock has been struggling most of the year. Shares just recently broke down below support at $40.00 on big volume. There has been very little oversold bounce. Now the stock looks poised to break down below the next level of key support near $37.50.

I am suggesting a trigger to launch bearish positions at $37.35. If triggered our target is $31.00. Once it's below $37.50 the next level of support appears to be the $30.00 level.

Trigger @ 37.35

Suggested Position: short EC stock @ (trigger)

Annotated chart:

Weekly chart:



Nationstar Mortgage Holdings - NSM - close: 36.16 change: -0.83

Stop Loss: 37.75
Target(s): 31.00
Current Gain/Loss: unopened

Entry on December -- at $--.--
Listed on December 30, 2013
Time Frame: 6 to 8 weeks
Average Daily Volume = 1.0 million
New Positions: Yes, see below

Company Description

Why We Like It:
NSM is in the financial sector. The company is a mortgage loan servicer. Back in November the company missed earnings estimates by a wide margin and lowered its 2014 outlook. The oversold bounce failed at technical resistance. Now shares are poised to breakdown below support, which could spark the next leg lower.

I am labeling this an aggressive, higher-risk trade. There is already a lot of bears in this trade. The most recent data listed short interest at 39% of the very small 20.4 million share float. That is a risk of a short squeeze. Thus I am suggesting small positions. Traders may want to use put options to limit their risk.

I am suggesting a trigger to launch small bearish positions at $35.65. If triggered our target is $31.00.

Trigger @ 35.65 *small positions*

Suggested Position: short NSM stock @ (trigger)

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

Buy the Feb $35 PUT (NSM1422N35) current ask $2.50

Annotated chart:

Weekly chart: