Shutterfly, Inc. - SFLY - close: 34.18 change: +1.12

Stop Loss: 32.25
Target(s): 39.75
Current Gain/Loss: unopened

Entry on September xx at $ xx.xx
Listed on September 18, 2011
Time Frame: 4 to 6 weeks
Average Daily Volume = 834 thousand
New Positions: Yes, see below

Company Description

Why We Like It:
SFLY is an Internet-based personal publishing company that lets consumer design and print their own photobooks and similar products. I will warn you now that shares of SFLY can be volatile. There are a lot of investors who are bearish on the name. The biggest worry is that another company like Apple (AAPL) or Google (GOOG) might try and compete with SFLY. It is the short interest that could really move this stock.

If SFLY breaks out past resistance it could see a big short squeeze higher. The most recent data listed short interest at 39% of the small 32.1 million share float. This week's rally has created a new Point & Figure chart buy signal with a long-term $48 target.

Aggressive traders could open bullish positions now. I want to see more confirmation past the $34 level and its 300-dma, both of which are technical resistance. Thus I am suggesting a trigger to open bullish positions at $35.25. Our target is $39.75. We'll start with a stop loss at $32.25.

Due to SFLY's volatility we want to keep our position size small to limit our risk.

Trigger @ 35.25

Suggested Position: buy SFLY stock @ (trigger)

- (or for more adventurous traders, try this option) -

buy the OCT $35 call (SFLY1220j35) current ask $1.75

Annotated chart:

Weekly chart: