NEW BEARISH Plays
Lululemon Athletica Inc. - LULU - close 37.80 change +0.58 stop 48.10
Informatica Corporation is the provider of enterprise data integration and data quality software and services. The Informatica platform is a set of technologies to enable a range of enterprise-wide data integration initiatives, including Enterprise Data Integration, Data Quality, Master Data Management, B2B Data Exchange, Application Information Lifecycle Management, Complex Event Processing, and Cloud Data Integration. The Company provides a range of services, including product-related customer support, consulting services, and education services. The services range from initial configuration of the Informatica platform, knowledge transfer to customers and partners, designing and implementing custom data integration solutions, project audit, and performance tuning, to helping customers implement enterprise-wide integration strategies, such as Integration Competency Centers or leadership Lean Integration practices. In March 2010, the Company acquired 29West Inc.
Target(s): 23.00, 22.75, 22.15
Key Support/Resistance Areas: 25.35, 24.60, 23.80, 23.25, 22.60, 22.00
Time Frame: 1 to 2 weeks
Why We Like It:
INFA is a volatile stock and has been barely hanging on to its 200-day SMA since the flash crash. The stock has been whipped around and has now closed below its 200-day SMA for the fourth consecutive day. I expect INFA to bounce up to retest the 200-day SMA from below before falling to retest its February lows, which is near our 2nd target of $22.75. Considering the recent price patterns over the past few months one may think INFA could bounce higher, but I'm not counting on it bouncing too much higher than the 200-day SMA considering the bearish tone of the past two weeks. But we may need to exhibit some patience once in the position. Let's use a trigger of $24.55 to initiate short positions. Our primary target is $22.75 but I have also listed $23.30 which is a good place to consider tightening stops. We'll use a wide stop of $26.10 which is above the 20-day, 50-day, and 100-day SMA's but it will be adjust once we are in the position. I will be surprised to see INFA much higher than $25.00 anytime soon. $24.88 is the 38.2% retracement from the stock's recent high to Thursday's low which will also converge with the declining 20-day and 50-day SMA's.
Suggested Position: Short INFA stock if it trades up to $24.55
Option Traders: Buy August $25.00 PUT, current ask $2.20, estimated ask at entry $1.80
Entry on July xx
Earnings 7/22/2010 (unconfirmed)
Average Daily Volume: 1.72 million
Listed on July 1, 2010
Starbucks Corp. - SBUX - close 24.35 change -0.31 stop 26.31
Starbucks Corporation, together with its subsidiaries (Starbucks) is the roaster and retailer of specialty coffee. It purchases and roasts whole bean coffees and sells them, along with fresh, rich-brewed coffees, Italian-style espresso beverages, cold blended beverages, a range of food items, a selection of premium teas, and beverage-related accessories and equipment, through Company-operated retail stores. Starbucks also sells coffee and tea products and licenses its trademark through other channels such as licensed retail stores and, through certain of its licensees and equity investees, Starbucks produces and sells a range of ready-to-drink beverages. The Company operates in three business segments: United States (US), International and Global Consumer Products Group (CPG).
Target(s): 23.70, 22.55, 21.30
Key Support/Resistance Areas: 26.50, 26.00, 25.25, 24.80, 24.00, 23.60, 22.50
Time Frame: 1 to 2 weeks
Why We Like It:
Last week SBUX broke below a trend line that began in October 2009 and collapsed below it 20-day, 50-day, and 100-day SMA's. These SMA's (in particular the 100-day SMA) have been key areas where the stock has bounced during its rally over the past year. And now that the stock is below them it has probably seen its best days, at least for awhile. I would like to use a trigger of $24.75 to enter short positions which is below the stock's 100-day SMA, the underside of the broken trend line, and the recent steep downtrend line, all of which are converging (see oval on chart). The $25.00 area could also be considered an entry point but I chosen $24.75 because it is near Friday's highs which could possibly form a double top on the intraday charts. Our primary target is $22.55 but I have also listed $23.70 as area to consider tightening stops. It is above the 200-day SMA which SBUX has not touched in over a year.
Suggested Position: Short SBUX stock if it trades to $24.75
Options Traders: August $25.00 PUTS, current ask $1.82, estimated ask at entry $1.60
Entry on June xx
Earnings 7/21/2010 (unconfirmed)
Average Daily Volume: 10 million
Listed on July 3, 2010