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Sears Holding - SHLD - cls: 150.24 chg: -3.62 stop: 154.36

Company Description:
Sears Holdings Corporation, the publicly traded parent of Kmart and Sears, Roebuck and Co., is the nation's third largest broadline retailer, with approximately $55 billion in annual revenues, and with approximately 3,900 full-line and specialty retail stores in the United States and Canada. (source: company press release or website)

Why We Like It:
The recent action in SHLD is suggesting the next move will be down. However, the stock can be very volatile and opening positions ahead of the FOMC decision on interest rates this Thursday is also a big risk. We don't know what direction the market will go after hearing the Fed's comments on Thursday. Looking at SHLD we see that the stock peaked in early June and has spent the last few days consolidating sideways between $150 and $155. Today the stock produced a bearish engulfing candlestick pattern, commonly interpreted as a bearish reversal. Yet shares are still holding on to the $150.00 level and its 50-dma. Therefore we're going to suggest a trigger to buy puts at $148.99. The low last week was $149.23. If we are triggered at $148.99 our target will be the $142.00-140.00 range. Currently the Point & Figure chart displays a triple-bottom breakdown sell signal with a $140 target but we suspect that target will drop even further.

Suggested Options:
We are suggesting the July and August puts. Our preference is for the August puts since Julys expire in less than four weeks.

BUY PUT JUL 150.00 KTQ-SU open interest=4208 current ask $4.50
BUY PUT JUL 145.00 KTQ-SV open interest=4495 current ask $2.50

BUY PUT AUG 150.00 KTQ-TU open interest= 598 current ask $7.30
BUY PUT AUG 145.00 KTQ-TV open interest= 88 current ask $5.20

Picked on June xx at $xxx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 08/17/06 (unconfirmed)
Average Daily Volume = 2.0 million
 

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