NEW BEARISH Plays

Brunswick Corp. - BC - close: 39.52 change: -0.89

Stop Loss: 41.15
Target(s): 32.00
Current Gain/Loss: unopened

Entry on May -- at $--.--
Listed on May 06, 2014
Time Frame: 6 to 8 weeks
Average Daily Volume = 1.0 million
New Positions: Yes, see below

Company Description

Why We Like It:
BC is in the consumer goods sector. The company makes recreational products ranging from boats and motors to fitness equipment to bowling and other gaming products. When the company reported earnings in April they lowered guidance and blamed their Q1 miss on the weather.

Technically you could argue that BC has formed a bearish double top with the peaks in December and March. Shares look poised to break down below key support in the $40.00 area. The February low and April low were both at $39.30. I am suggesting a trigger to launch bearish positions at $39.20.

Trigger @ $39.20

Suggested Position: short BC stock @ (trigger)

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

Buy the Jun $40 PUT (BC1421R40) current ask $1.85

Annotated chart:

Weekly chart:



Sears Holding Corp. - SHLD - close: 40.58 change: -2.09

Stop Loss: 43.25
Target(s): 32.50
Current Gain/Loss: unopened

Entry on May -- at $--.--
Listed on May 06, 2014
Time Frame: exit PRIOR to earnings on May 22nd
Average Daily Volume = 1.5 million
New Positions: Yes, see below

Company Description

Why We Like It:
SHLD is in the services sector. The company operates a retail chain with over 2,000 locations. A quick glance at the chart and you'll notice the big drop on April 7th. That was SHLD spinning off Land's End (LE). Unfortunately the post-spin-off decline picked up momentum and SHLD plunged to new two-year lows before bouncing. If you study SHLD's chart you'll notice the stock is prone to big moves and tends to see big gap downs. The big rallies are all short covering. There are a lot of bears betting that SHLD will trade lower. The most recent data listed short interest at 60% of the 43.3 million share float. That figure alone makes any bearish trade on SHLD a relatively high-risk and more aggressive trade. At the same time retail has been a very tough spot to be in this year. The terrible winter has been a common excuse for disappointing sales. SHLD was no exception. We suspect that SHLD's stock will fall back towards its recent lows but we do not want to hold over the earnings report, which is coming up on May 22nd.

We want to keep our position size small to limit our risk and traders may want to use put options instead of trying to short SHLD stock. Tonight we're suggesting a trigger for bearish positions at $39.90. If triggered our target is $32.50 but remember to exit before May 22nd.

Trigger @ $39.90 *small positions*

Suggested Position: short SHLD stock @ (trigger)

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

Buy the Jun $40 put (SHLD1421R40) current ask $3.75

Annotated chart: