Play Editor's Note:
The market delivered a tepid oversold bounce today thanks to some last minute shopping by the bulls. Midday it looked like the major indices were going to breakdown under short-term support. While we did get the bounce we still don't have a clear picture on market direction. I am finding more bearish candidates than bullish ones. Instead of listing full-fledged plays tonight I'm going to provide a big watch list of candidates to consider as potentials.
LLL $77.06 - Several of the defense-sector stocks look like bearish candidates today. LLL's momentum is rolling over. A drop under $76.00 could be used as a new bearish entry point but watch out for possible support at the 50-dmam. I would take profits in the $71-70 zone but it wouldn't surprise me to see LLL keep falling.
ATK $80.47 - This is another defense stock. Look for another failed rally near the 100-dma or a new drop under $79.50 as a possible entry point. I would aim for the $75-74 level first. Use a secondary target near the $71-70 zone.
CMG $47.42 - I love their food but the stock is sinking. Traders could use a new drop under $47.00 as a bearish entry point and target the $40.50-40.00 zone. The challenge here is where do you put your stop since shares of CMG can be so volatile.
MLM $79.94 - This stock was breaking down midday. Look for a new low under $77.00 as an entry point. I would aim for the $60.00 level but be sure to take profits every $4 to $6.
ARE $54.52 - This is a REIT stock. Several of the larger REIT stocks look like bearish candidates. Consider a new low under $52.50 as a bearish entry point. Aim for $46.00 and then $41.00 as targets.
LMT $77.49 - Look for a new decline under $77.00 as a possible entry point for puts. Target the $71-70 region.
PSA $62.03 - Another REIT stock. Look for a drop under $59.00 as a bearish entry point. Aim for the 2008 lows.
VNO $49.57 - Yet another REIT stock. Consider a drop under $46.50 as an entry point. Aim for the $40 region.
SPG $42.98 - Yup, another REIT stock. A new drop under $39.85 is probably a bearish entry point. Aim for the 2008 lows.