NEW BEARISH Plays
Arctic Cat Inc. - ACAT - close: 40.48 change: -0.42
Stop Loss: 41.25
Target(s): to be determined
Current Gain/Loss: unopened
Entry on April -- at $--.--
Listed on April 29, 2014
Time Frame: about 2 weeks
Average Daily Volume = 159 thousand
New Positions: Yes, see below
Why We Like It:
ACAT is in the consumer goods sector. The company manufacturers snowmobiles and all-terrain vehicles (ATVs). The company is starting to make a happy of missing earnings estimates. The stock's big gap down in October last year was due to a significant earnings miss. ACAT's stock plunged again in January this year when the company missed both the top and bottom line estimates and then lowered their 2014 guidance.
ACAT's stock managed to bounce back to resistance near $50.00 and then slowly fade lower over the last several weeks. Now ACT is sitting near support at $40.00 and looks poised to break it.
This is going to be a relatively short-term trade. The company is due to report earnings in mid May. No date has been set yet but it's probably two, maybe three weeks out.
Tonight we're suggesting a trigger for bearish positions at $39.75. We are not setting an exit target yet. I will note that the
Point & Figure chart for ACAT is bearish with a $31.00 target.
Trigger @ $39.75
Suggested Position: short ACAT stock @ (trigger)
- (or for more adventurous traders, try this option) -
Buy the May $40 PUT (ACAT1417Q40) current ask $2.00