NEW BEARISH Plays

Rackspace Hosting - RAX - close: 35.83 change: -1.63

Stop Loss: 37.05
Target(s): 31.10
Current Gain/Loss: unopened

Entry on March -- at $--.--
Listed on March 10, 2014
Time Frame: 6 to 8 weeks
Average Daily Volume = 4.7 million
New Positions: Yes, see below

Company Description

Why We Like It:
RAX is in the technology sector. The company provides cloud-based computing and web hosting services. The company has been getting crushed by competition in its industry. The sudden departure of the CEO last month probably raises some eyebrows. The stock has been volatile on speculation it is an acquisition target.

We suspect that RAX will retest its recent low. The recent two-day sell-off has broken down through some key moving averages and the short-term pattern of support.

Due to RAX's recent volatility I am suggesting small positions or you may want to buy put options to limit your risk. I am suggesting a trigger at $35.45. If triggered our target is $31.10. The Point & Figure chart for RAX is bearish with a $21.00 target.

Trigger @ 35.45

Suggested Position: short RAX stock @ (trigger)

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

Buy the Apr $35 PUT (RAX1419P35) current ask $1.60

Annotated chart: