Option Investor

Daily Newsletter, Tuesday, 10/11/2005

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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

Trinity Ind. - TRN - close: 36.88 chg: -1.34 stop: 40.01

Company Description:
Trinity Industries, Inc., with headquarters in Dallas, Texas is one of the nation's leading diversified industrial companies. Trinity reports five principal business segments: the Rail Group, the Railcar Leasing and Management Services Group, the Inland Barge Group, the Construction Products Group and the Industrial Products Group. (source: company press release or website)

Why We Like It:
We like TRN as a bearish technical candidate. The company issued upside earnings guidance back in September but the stock seems to have run out of steam after a big run from its May lows. Technically TRN has produced a double-top pattern with the peaks in September and November and now shares are breaking down under support in the $37.50-38.00 region in addition to its simple 50-dma. The MACD is bearish as are its stochastics and RSI. Volume on today's breakdown was almost double its average. We are going to start the play with a wide stop loss. Our target is the simple 200-dma near $32.00 (target 32.50-32.00). We do plan to exit ahead of its very late October earnings report.

Picked on October 11 at $36.88
Change since picked: + 0.00
Earnings Date 10/31/05 (unconfirmed)
Average Daily Volume: 385 thousand

Play Updates

Updates On Latest Picks

Long Play Updates


Short Play Updates

Career Educ. - CECO - close: 34.05 chg: -0.15 stop: 36.51

Another down day for the S&P appeared to stall CECO's oversold bounce. The stock traded in a narrow range and began to fade lower into the close. Big declines for education stocks EDMC and STRA may have weighed on investor sentiment. We remain bearish and continue to target the $31.00 level.

Picked on October 04 at $34.99
Change since picked: - 0.94
Earnings Date 10/26/05 (unconfirmed)
Average Daily Volume: 1.6 million


Cree Inc. - CREE - close: 22.66 chg: -0.58 stop: 24.01

The play is now open. Another big day of selling in the semiconductor sector helped push CREE through the bottom of its recent trading range. The stock hit our trigger to short the stock at $22.99. Our one-week target is the $21.00 level. We do plan to exit ahead of the company's earnings report on October 20th.

Picked on October 11 at $22.99
Change since picked: - 0.33
Earnings Date 10/20/05 (confirmed)
Average Daily Volume: 1.3 million


Enzo Biochem - ENZ - close: 13.19 chg: -0.31 stop: 14.51 *new*

ENZ is back to its volatile ways. The stock rallied to $14.25 this morning but failed under its descending 10-dma. The stock then promptly reversed and sank to new lows. Our target is the $12.25 level but we're planning to exit on Thursday afternoon to avoid the company's earnings report on Friday. We're lowering the stop loss to $14.51.

Picked on October 03 at $14.36
Change since picked: - 1.17
Earnings Date 10/14/05 (unconfirmed)
Average Daily Volume: 90 thousand


Corning Inc. - GLW - close: 17.79 chg: -0.46 stop: 20.01

Wow! GLW dipped to $16.61 intraday almost hitting the top end of our target (16.50) today. The stock did rally back sharply but the end result was a breakdown below the $18.00 level and its simple 100-dma. Volume came in very heavy on today's session. We can now look for the $18 level to act as short-term overhead resistance but considering the size of the intraday rebound there may be more bounce to come before GLW turns lower again.

Picked on October 09 at $18.54
Change since picked: - 0.75
Earnings Date 10/26/05 (confirmed)
Average Daily Volume: 11.9 million


99c Only Stores - NDN - close: 9.01 chg: -0.14 stop: 10.01

Rising energy prices is bad news for retailers. This helped push NDN to another 1.5% loss. The stock is poised to breakdown under the $9.00 level. Our target is the $8.60-8.50 range.

Picked on September 27 at $ 9.40
Change since picked: - 0.39
Earnings Date 10/20/05 (unconfirmed)
Average Daily Volume: 581 thousand


Toll Brothers - TOL - close: 38.19 chg: +0.00 stop: 42.51

There was no change in shares of TOL today and we see no changes from our previous updates on the stock. Our target is the $36.50-36.00 range.

Picked on October 05 at $40.95
Change since picked: - 2.76
Earnings Date 08/25/05 (confirmed)
Average Daily Volume: 4.6 million

Closed Long Plays

EMC Corp - EMC - close: 12.92 change: -0.20 stop: 12.95

A tough day for the NASDAQ composite and the index's breakdown below its simple and exponential 200-dma's may have unnerved any tech stock bulls. Shares of EMC followed suit and fell below short-term support near $13.00. We were stopped out at $12.95.

Picked on October 09 at $13.21
Change since picked: - 0.29
Earnings Date 10/19/05 (confirmed)
Average Daily Volume: 12.8 million

Closed Short Plays

Cost Plus - CPWM - close: 16.64 change: -0.28 stop: 19.01

Target achieved. CPWM dipped to $16.10 this morning, which was more than enough to hit our target in the $16.50-16.00 range. Volume came in pretty heavy at almost three times the daily average. If you choose to keep the short open be sure to adjust your stop loss. The stock looks very oversold and due for a bounce.

Picked on September 20 at $19.78
Change since picked: - 3.14
Earnings Date 11/17/05 (unconfirmed)
Average Daily Volume: 390 thousand

Today's Newsletter Notes: Market Wrap by Jim Brown and all other plays and content by the Option Investor staff.


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