In addition to tonight's new candidate(s), consider these stocks as possible trading ideas and watch list candidates. Many of these may need to see a break past key support or resistance:
CRM, WHR, ADS, PRLB, N, MD, CRR, PSX, NOV, ATK, RKT, WYN, IBB, COST, LBTYA,
NEW DIRECTIONAL PUT PLAYS
Rackspace Hosting - RAX - close: 49.74 change: -2.29
Stop Loss: 50.25
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below
Why We Like It:
RAX provides web-based IT services and cloud computing. Unfortunately, RAX already has pretty significant competition in the cloud computing field with giant Amazon.com. It's going to get worse with IBM and Google (GOOG) poised to build up their cloud computer services. RAX was downgraded today and shares underperformed the market with a -4.4% decline. Today's close under round-number support at $50.00 is bearish.
Traders may want to buy puts right now. The March 15th low was $49.18. I am suggesting a trigger to buy puts at $49.00. If triggered our short-term target is $45.50. The $45.00 level does look like it could be significant support.
NOTE: I would keep our position size small. While there is growing competition in the cloud computing field there are also expectations that the business could see consolidation and smaller companies, like RAX, could be takeover targets.
Trigger @ 49.00 *Small Positions*
- Suggested Positions -
Buy the Apr $50 PUT (RAX1320P50) current ask $2.00
Entry on March -- at $---.--
Average Daily Volume = 2.4 million
Listed on March 27, 2012