Editor's Note:

In addition to tonight's new candidate(s), consider these stocks as possible trading ideas and watch list candidates. Some of these stocks may need to see a break past key support or resistance:

(bearish ideas)
PII, ACAT, PRU, BYI, GTLS, YELP,



NEW DIRECTIONAL PUT PLAYS

Athenahealth, Inc. - ATHN - close: 116.83 change: -1.67

Stop Loss: 124.05
Target(s): to be determined
Current Option Gain/Loss: Unopened
Time Frame: 4 to 12 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
ATHN is considered part of the technology sector. The company provides healthcare information services. First a little earnings history for ATHN. The company guided earnings lower in December last year and then beat Wall Street's estimates on both the top and bottom line when they reported on February 6th, 2014. The stock exploded higher thanks to a big short interest. ATHN soared from $140 to $206 in less than a month.

The $206 level was the peak with ATHN failing there more than once. They reported earnings again on April 17th and missed analysts' estimates for both the top and bottom line. ATHN management then narrowed their guidance by lowering the top end but raising the bottom end of earnings guidance. That didn't really inspire any new buyers.

The new wrinkle in ATHN's story is David Einhorn. At the recent Ira Sohn Investment Conference Greenlight Capital's President David Einhorn said ATHN was one of his top bearish picks. Einhorn says ATHN has a good business but the stock price is just wildly expensive. Margins are falling and ATHN is facing growing competition. David is right about ATHN being expensive. The company's peer group has a P/E ratio of 43. ATHN's P/E ratio is over 400. Einhorn speculated that ATHN could fall -80% from its peak. That would mean a price target of $41 a share.

ATHN fell sharply on the Einhorn news but has since filled the gap only to roll over again. This keeps the bearish trend of lower highs and lower lows intact. We are suggesting new bearish positions at the opening bell tomorrow. I do consider this an aggressive, higher-risk trade. ATHN can see big swings and the latest data listed short interest at 29% of the small 37.2 million share float. That does raise the risk of a short squeeze.

We'll try and limit our risk with a stop loss at $124.05, which is above yesterday's high. We're not setting an exit target yet but I'm tentatively aiming for the $100 level, which has been support and resistance in the past. I would keep position size small to limit your risk.

*small positions* - Suggested Positions -

Buy the Jun $100 PUT (ATHN140621P100) current ask $1.95

- or -

Buy the Sep $100 PUT (ATHN140920P100) current ask $6.80

*I've provided the more standardized option symbol format.
symbol-year-month-day-put-strike

Annotated Chart:

Entry on May -- at $---.--
Average Daily Volume = 1.5 million
Listed on May 14, 2014


Lumber Liquidators - LL - close: 81.51 change: -2.25

Stop Loss: 84.05
Target(s): to be determined
Current Option Gain/Loss: Unopened
Time Frame: 6 to 9 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
LL is in the services sector. The company is a multi-channel specialty retailer of hardwood flooring. The stock delivered an impressive rally from its 2011 lows near $14 to hit $120 in November last year. Yet now with the housing recovery slowing down investors appear to be taking profits. LL reported earnings on April 30th and missed both the top and bottom line estimate. Management blamed the lousy weather during the first quarter. That hasn't stopped traders from selling the rallies.

Now LL is poised to breakdown under support near $80.00. We are suggesting a trigger to buy puts at $79.75. More conservative traders may want to use an alternative entry point at $78.75 so it's under the April 30th low of $78.92.

I do consider a more aggressive trade because of LL's short interest. The most recent data listed short interest at 25% of the small 24.3 million share float, which raises the risk of a short squeeze.

I am not setting a target yet but I've got a mental target of $72.00. This lines up with the P&F chart, which is bearish and forecasting at $72 target and it also lines up with the June 2013 low near $71.60.

Trigger @ $79.75 *small positions*

- Suggested Positions -

Buy the Aug $75 PUT (LL140816P75) current ask $4.20

*I've provided the more standardized option symbol format.
symbol-year-month-day-put-strike

Annotated Chart:

Weekly Chart:

Entry on May -- at $---.--
Average Daily Volume = 888 thousand
Listed on May 14, 2014