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New Calls

None today.
 

New Puts

Allegheny Tech - ATI - cls: 106.70 chg: -3.00 stop: 112.15

Company Description:
Allegheny Technologies Incorporated is one of the largest and most diversified specialty metals producers in the world with revenues of $5.3 billion during the most recent four quarters ending March 31, 2007. (source: company press release or website)

Why We Like It:
It looks like the bull run in ATI has finally ended - or at least taken a vacation. The stock peaked in April and has struggled to breakout past $116 ever since. Now we're seeing a clear sell signal with today's breakdown under the 100-dma. The P&F chart has also produced a new sell signal and a $94 price target. We're suggesting puts in ATI with the stock under $108 although a failed rally under $110 would work as well. We do have a wide stop loss because shares can be volatile. The steel sector recently received some bearish comments about valuations and the latest news that a German firm was not interested in buying U.S. Steel (X) may have let the air out of the M&A expectations for this sector. We have two targets for ATI. Our first target is the $100.50-100.00 range. Our second target is the $95.50-95.00 range. More aggressive traders may want to aim for the simple 200-dma (currently near $92).

Suggested Options:
We are suggesting the July puts.

BUY PUT JUL 110 ATI-SX open interest=4259 current ask $6.90
BUY PUT JUL 105 ATI-SA open interest=4434 current ask $4.40
BUY PUT JUL 100 ATI-ST open interest=2021 current ask $2.55

Picked on June 12 at $106.70
Change since picked: + 0.00
Earnings Date 07/25/07 (unconfirmed)
Average Daily Volume = 2.1 million

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Weyerhauser - WY - cls: 80.27 chg: -0.40 stop: 82.05

Company Description:
Weyerhaeuser Company, one of the world's largest integrated forest products companies, was incorporated in 1900. In 2006, sales were $21.9 billion. It has offices or operations in 18 countries, with customers worldwide. (source: company press release or website)

Why We Like It:
WY has essentially been consolidating sideways over the last few months with a pattern of higher lows and lower highs. These types of pennant-shaped patterns are usually neutral. However, this time, given the market's widespread weakness, we suspect that WY will break down. The 100-dma has been support in the past so we are suggesting a trigger under the $100-dma at $79.34. More aggressive traders may want to jump in early with a trigger at 79.49 under last Friday's low. If we are triggered our target is the $75.00-74.00 range. The $75 level is likely to be psychological support and the $74 level was support back in March. The Point & Figure chart looks very bearish with a $61 target.

Suggested Options:
We are suggesting the July puts. Our trigger to buy puts is at $79.34.

BUY PUT JUL 80.00 WY-SP open interest=3761 current ask $2.40
BUY PUT JUL 75.00 WY-SO open interest=4698 current ask $0.80

Picked on June xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 08/03/07 (unconfirmed)
Average Daily Volume = 2.1 million
 

New Strangles

None today.
 

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