Option Investor

Daily Newsletter, Thursday, 03/17/2005

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Table of Contents

  1. Market Wrap
  2. New Plays
  3. In Play Updates and Reviews

Market Wrap

Market Wrap

New Plays

Most Recent Plays

New Plays
Long Plays
Short Plays

New Long Plays

None today.

New Short Plays

United Industrial Crp. - UIC - cls: 29.23 chg: -1.92 stop: 31.51

Company Description:
United Industrial Corporation is a company focused on the design, production and support of defense systems. Its products include unmanned aerial vehicles, engineering and logistics services, and test and training systems. The Company also manufactures combustion equipment for biomass and refuse fuels. (source: company press release)

Why We Like It:
Looking at what UIC's products and services one would think they are in the right industry for growth. Military logistics and unmanned vehicles are sure to be growth industries. UIC's earnings report yesterday proved that with what sounded like an outstanding quarter for the company. Too bad the 39 cents per share came in below analyst estimates. The stock reacted poorly today and broke down under its simple and exponential 200-dma in addition to breaking down under the $30.00 mark on strong volume that was more than double the norm. Technicals are obviously bearish here and its P&F chart is in a sell signal pointing to a $20.00 target. We are targeting a drop into the $26.00-25.00 range. If UIC produces an oversold bounce tomorrow look for resistance and a failed rally in the $30.00-31.00 region.

Picked on March 17 at $29.23
Change since picked: - 0.00
Earnings Date 03/16/05 (confirmed)
Average Daily Volume: 181 thousand


West Marine - WMAR - close: 21.20 chg: -1.18 stop: 23.11

Company Description:
West Marine, Inc. is the nation's largest specialty retailer of boating supplies and apparel, with 377 stores in 38 states, Canada and Puerto Rico, and more than $680 million in annual sales. The Company's successful catalog and Internet channels offer customers approximately 50,000 products -- far more than any competitor -- and the convenience of being able to exchange catalog and Internet purchases at its retail stores. The Company's Port Supply division is the country's largest wholesale distributor of marine equipment serving boat manufacturers, marine services, commercial vessel operators and government agencies. (source: company press release)

Why We Like It:
WMAR has been stuck in a trading range between $22.00 and $25.00 for most of the last 4 1/2 months. Shares tried to breakout in early February but failed near $27.00. Since then the stock has been sliding save for a brief five-day bounce just before earnings in early March. The earnings report was disappointing and WMAR has continued to slide ever since. Now the stock has broken down below its 200-dma and the bottom of its trading range at $22.00 on volume over twice the average. The next stop looks like the $19.00 level where shares bounced in October. We are going to target the $19.00 region. Readers can be patient and look for an oversold bounce back toward $22.00-22.25 and then short a failed rally there.

Picked on March 17 at $21.20
Change since picked: - 0.00
Earnings Date 03/03/05 (confirmed)
Average Daily Volume: 155 thousand

Play Updates

Updates On Latest Picks

Long Play Updates

Catellus Dev. REIT - CDX - close: 28.01 chg: +0.06 stop: 27.15

No change from previous update.

Picked on March 07 at $28.76
Change since picked: - 0.75
Earnings Date 02/25/05 (confirmed)
Average Daily Volume: 397 thousand


Cox Radio - CXR - close: 16.82 chg: +0.12 stop: 15.99

No change from previous update.

Picked on March 01 at $16.53
Change since picked: + 0.29
Earnings Date 02/23/05 (confirmed)
Average Daily Volume: 334 thousand


Valassis Comm. - VCI - close: 35.94 chg: -0.04 stop: 34.75

With today's failed rally above the $36.00 level we are expecting VCI to retest the $35.00 level as support. Readers can choose to exit here, sit out and wait for the bounce or just hold on.

Picked on February 23 at $36.12
Gain since picked: - 0.18
Earnings Date 02/22/05 (confirmed)
Average Daily Volume: 337 thousand

Short Play Updates

Anheuser Busch - BUD - close: 47.40 chg: +0.06 stop: 50.11

No change from previous update.

Picked on February 7 at $48.32
Gain since picked: - 0.92
Earnings Date 02/02/05 (confirmed)
Average Daily Volume: 2.4 million


Countrywide Financial - CFC - close: 32.74 chg: -0.24 stop: 35.01

No change from previous update.

Picked on March 09 at $33.36
Change since picked: - 0.52
Earnings Date 02/02/05 (confirmed)
Average Daily Volume: 3.8 million


Flextronics - FLEX - close: 12.30 chg: +0.23 stop: 13.01

Right on cue! Just as expected FLEX bounced but the rally stalled at resistance near $12.50. Readers can use today's afternoon rollover as a new bearish entry point but it wouldn't hurt to wait for FLEX to confirm its direction by waiting for shares to trade under the $12.00 mark again.

Picked on March 16 at $11.95
Change since picked: + 0.35
Earnings Date 04/28/05 (unconfirmed)
Average Daily Volume: 5.5 million


Nabi Biopharma - NABI - close: 12.02 chg: -0.08 stop: 13.11

No change from previous update.

Picked on March 06 at $11.80
Change since picked: + 0.22
Earnings Date 02/15/05 (confirmed)
Average Daily Volume: 436 thousand


NY Times - NYT - close: 36.24 chg: -0.02 stop: 37.35

No change from previous update.

Picked on February 20 at $37.20
Gain since picked: - 0.96
Earnings Date 01/25/05 (confirmed)
Average Daily Volume: 516 thousand


ScanSource - SCSC - close: 55.89 chg: -0.34 stop: 62.01

No change from previous update. The stock is looking a little oversold here. Expect an oversold bounce near $55.00 before SCSC continues lower.

Picked on March 13 at $ 57.58
Change since picked: - 1.69
Earnings Date 04/28/05 (unconfirmed)
Average Daily Volume = 95 thousand


Energy Select Spdr - XLE - close: 43.39 chg: +0.74 stop: 45.15

The lack of follow through on the breakdown/reversal over a week ago is becoming a problem. We will plan to exit early during tomorrow's session if XLE trades at or near the $44.00 level.

Picked on March 09 at $43.33
Change since picked: + 0.06
Earnings Date 00/00/00 (unconfirmed)
Average Daily Volume: 4.1 million

Closed Long Plays

None today.

Closed Short Plays

None today.


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