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New Puts

AutoZone - AZO - close: 95.45 change: -1.47 stop: 97.75

Company Description:
AutoZone sells auto and light truck parts, chemicals and accessories through 3,505 AutoZone stores in the United States and 73 AutoZone stores in Mexico, and also sells the ALLDATA brand automotive diagnostic and repair software. On the web, AutoZone sells diagnostic and repair information and auto and light truck parts through http://www.autozone.com. (source: company press release or website)

Why We Like It:
AZO is another way for traders to play the weakness in retailers. Yet this way investors can also play on consumers concerns over rising fuel prices. The higher gas prices go the less people drive and the less people spend on their vehicles. The stock has already broken its bullish up trend from May through early July. Now shares have fallen through the 50-dma and the recent bounce failed to push back above this technical level. Looking at the weekly chart below you can see there is a bearish divergence between the stock price and its RSI and MACD indicators. We would suggest buying puts here and targeting the 200-dma near $91.00 (our target 91.25-91.00). More conservative traders may want to consider waiting for another decline under $95 to open positions. We plan to exit this play ahead of AZO's late September earnings report.

Suggested Options:
We are suggesting the October puts.

BUY PUT 100.00 AZO-VT OI= 1 current ask $6.30
BUY PUT 95.00 AZO-VS OI=440 current ask $3.50
BUY PUT 90.00 AZO-VR OI=201 current ask $1.80

Picked on August 28 at $ 95.45
Change since picked: - 0.00
Earnings Date 09/20/05 (unconfirmed)
Average Daily Volume = 732 thousand


CDW Corp - CDWC - close: 59.44 chg: -0.50 stop: 62.01

Company Description:
CDW was founded in 1984 and today employs approximately 4,000 coworkers. In 2004, the company generated sales of $5.7 billion. CDW's direct model offers one-on-one relationships with knowledgeable account managers; purchasing by telephone, fax, the company's award-winning CDW.com web site, customized CDW@work(TM) extranets, CDWG.com web site and macwarehouse.com web site; custom configured solutions and same day shipping; and pre- and post-sales technical support, with approximately 120 factory-trained and A+ certified technicians on staff. (source: company press release or website)

Why We Like It:
Now that both technology and the retail sectors are looking weak CDWC is a great way to play both sectors. This is a catalog/web retailer for tech and computer equipment. The stock surged higher back in July but CDWC has been slowly slipping lower under a very steady trend of lower highs ever since. Now the stock has broken technical support at the $60.00 level, its 50-dma and its 200-dma in the last couple of sessions. CDWC is also in the process of breaking its three-month trendline of support (see chart). That's why we want to use a trigger at $58.99 to open the play just to confirm the breakdown. Our initial target is the $55.00-54.50 range.

Suggested Options:
We are suggesting the October puts.

BUY PUT OCT 60.00 DWQ-VL OI= 688 current ask $2.75
BUY PUT OCT 55.00 DWQ-VK OI=2410 current ask $1.00

Picked on August xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 07/19/05 (confirmed)
Average Daily Volume = 867 thousand

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