NEW DIRECTIONAL PUT PLAYS

NetApp, Inc. - NTAP - close 41.22 change -0.56 stop 42.72

Company Description:
NetApp, Inc. (NetApp) is a provider of storage and data management solutions. The Company offers solutions for storing, managing, protecting and archiving business data. The Company is engaged in the design, manufacturing, marketing and technical support of networked storage solutions. It offers storage solutions that incorporate its unified storage platform and the functionality of the data and storage resource management software. NetApp markets its products in the United States and in foreign countries through its sales personnel and subsidiaries. NetApp focuses on the data management and storage markets, offering an array of solutions from its high-end products designed for large enterprise customers to entry level products designed for mid-sized enterprise customers.

Target(s): 39.05, 37.00, 35.25
Key Support/Resistance Areas: 41.84, 40.00, 39.00, 36.50, 35.00
Time Frame: 1 week

Why We Like It:
NTAP printed a 5 year high this past week which was 28 cents higher than its highs in December 2006. The stock has gone parabolic since its 2008/2009 lows and for good reason. It is in a hot technology sector that is in high demand. However, the stock can not go straight up forever and I believe it is due for a pullback. The highs from 2006 and 2010 should provide enough "double top" resistance for a countertrend trade to the downside, i.e a blow-off top. The recent highs also give us a good reference point to place a protective stop just above if NTAP decides to continue its ascent so we can be right out of the trade if we are wrong. The pattern after big advances recently, such as the most recent, is for the stock to give a decent percentage of the gains back. There is typically a 5% to 10% correction so I have placed various targets along the way to help guide readers. In addition, percentage wise NTAP has surged more recently compared to its run up in 2009 which leads me to believe that if the selling gets started it may accelerate quickly as traders do not want to be holding the bag at the top of the range. I suggest readers initiate short positions at current levels with a stop at $42.72. I have provided a weekly chart below. NOTE: I view this trade as potentially being quick.

Suggested Position: Buy July $41.00 PUTS at current levels, current ask $1.55

Annotated weekly chart:

Entry on June xx
Earnings 8/19/2010 (unconfirmed)
Average Daily Volume: 9.1 million
Listed on June 19, 2010


International Game Technology - IGT - close 18.35 change -0.11 stop 19.26

Company Description:
International Game Technology (IGT) is a global gaming company specializing in the design, manufacture, and marketing of electronic gaming equipment and systems products. IGT maintains an array of entertainment-inspired gaming product lines. In addition to its United States production facilities in Nevada, it manufactures gaming products in the United Kingdom, and through third-party manufacturers in Japan and China. The Company derives its revenues from the distribution of electronic gaming equipment, systems, services and licensing. It operates in two segments: North America and International. North America consists of its operations in the United States and Canada, comprising 77% of consolidated revenues during the fiscal year ended October 3, 2009 (fiscal 2009). International consists of its operations in all other jurisdictions worldwide, comprising 23% of consolidated revenues during fiscal 2009.

Target(s): 17.70, 17.30, 16.80
Key Support/Resistance Areas: 19.00, 18.75, 18.09, 17.55, 17.25, 16.60
Time Frame: 1 to 2 weeks

Why We Like It:
IGT is in a solid downtrend and I expect it to continue. The stock is making lower highs and lower lows. The stock is below all its SMA's and a downtrend line that it recently touched on Tuesday 6/15 before a big gap down. All of this should provide plenty of resistance and if the overall market reverses lower anytime in the coming days IGT will be one of the first stocks to go. Ideally I would like to see IGT test $18.75 before initiating short positions which is Friday's highs and within the prior three day's trading range. But I'm not so sure we will see a bounce this high. I suggest we use a trigger of $18.50 to initiate short positions. Our stop is above 100-day, 20-day, and 200-day SMA's and the recent downtrend line. This is a wide stop for now to account for volatility and will be adjusted when a better price is determined. I've provided three targets which are good places to tighten stops if IGT continues lower from our entry.

Suggested Position: July $19.00 PUTS, current ask $1.15, estimated ask at entry $1.05

Annotated chart:

Entry on June xx
Earnings 7/22/2010 (unconfirmed)
Average Daily Volume: 4.8 million
Listed on June 19, 2010