NEW BULLISH Plays

The ExOne Company - XONE - close: 23.97 change: +0.08

Stop Loss: 20.75
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Entry on October -- at $---.--
Listed on October 18, 2014
Time Frame: 8 to 12 weeks
Average Daily Volume = 626 thousand
New Positions: Yes, see below

Company Description

Why We Like It:
This is a technical trade because the fundamentals are just not there for XONE. The last couple of earnings reports have been terrible. Revenues are hit or miss. The last quarterly report from XONE showed revenues up +21% over a year ago but gross margins were almost cut in half (45% down to 22% margins). Net income has been missing estimates.

Who is XONE? They are part of the new 3D printing industry. XONE provides services and printers for the industry. The whole group, with maybe the exception of SSYS, has been struggling. Yet the 3D printing stocks have also seen a huge bounce in the last couple of weeks. Of course that might be all short covering.

It is the high short interest that makes XONE an interesting bullish candidate. If this market bounce continues then this stock could see another big short squeeze. The most recent data listed short interest at 45% of the very small 8.7 million share float.

Right now the oversold bounce in XONE has stopped at round-number resistance near $25.00 and technical resistance at its simple 50-dma. A breakout could spark a big move higher. However, this is a volatile stock. We could just as easily see XONE spike to a new high above $25 and then reverse sharply lower. Look at the intraday range on the last couple of sessions. If you can't handle that much volatility then this may not be the trade for you.

(NOTE: You could check out shares of VJET. They have a similar pattern and could also see a big short squeeze but VJET is a little less volatile and has less short interest.)

We should consider this a higher-risk trade. Tonight we're listing an entry point to open bullish positions at $25.35. We'll use a stop a little below Friday's low. You may want to use the call options to limit your risk.

Trigger @ $25.35 *Small positions to limit risk*

- Suggested Positions -

Buy XONE stock @ (trigger)

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

Buy the NOV $25 call (XONE141122C25) current ask $2.00

Option Format: symbol-year-month-day-call-strike

Annotated Chart:


NEW BEARISH Plays

Mistras Group - MG - close: 16.10 change: -0.10

Stop Loss: 17.05
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Entry on October -- at $---.--
Listed on October 18, 2014
Time Frame: 8 to 12 weeks
Average Daily Volume = 81.5 thousand
New Positions: Yes, see below

Company Description

Why We Like It:
MG is in the services sector. The company evaluates the structural integrity of infrastructure. A company press release describes MG as "a leading 'one source' global provider of technology-enabled asset protection solutions used to evaluate the structural integrity of critical energy, industrial and public infrastructure. Mission critical services and solutions are delivered globally and provide customers with asset life extension, improved productivity and profitability, compliance with government safety and environmental regulations, and enhanced risk management operational decisions."

Unfortunately, for MG investors the company is developing a habit of missing Wall Street's earnings estimates. They've missed three quarters in a row. Their most recent report was October 7th. Wall Street expected a profit of 12 cents a share. MG only delivered 4 cents.

This big earnings miss produced the spike down you see on the daily chart. There has been almost zero bounce and now MG has drifted lower to major support at the $16.00 level. A breakdown here would be very bearish. The Point & Figure chart is already forecasting a long-term bearish target of $6.00.

Tonight we are suggesting a trigger to launch bearish positions at $15.85. I am suggesting caution. This stock does not trade very much. Average volume is very low. That should make traders cautious. I'm suggesting very small positions or try and put options to limit risk.

Trigger @ $15.85 *Very small positions to limit risk*

- Suggested Positions -

Short MG stock @ (trigger)

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

Buy the NOV $17.50 PUT (MG141122P17.50) current ask $1.80

Option Format: symbol-year-month-day-call-strike

Annotated Chart:

Weekly Chart: