BEARISH Play Updates
Informatica Corporation - INFA - close 24.39 change +0.60 stop 26.10
Target(s): 23.82, 23.00, 22.75, 22.15
Key Support/Resistance Areas: 25.35, 24.60, 23.80, 23.25, 22.60, 22.00
Current Gain/Loss: +0.65%
Time Frame: 1 to 2 weeks
New Positions: Yes, on bounces
7/6: INFA traded up to its 200-day SMA today and then backed off. It remains below all of its major SMA's which should keep any bounces in check. I'm going to list another target of $23.82 which is near Friday's closing price. If INFA trades down here prior to bouncing I suggest we take profits on this trade, or at least tighten stops to protect against a reversal.
7/3: 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 adjusted 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.
Current Positions: Short INFA stock, entry was at $24.55
Option Traders: August $25.00 PUT
Entry on July 6, 2010
Earnings 7/22/2010 (unconfirmed)
Average Daily Volume: 1.72 million
Listed on July 1, 2010
Lululemon Athletica Inc. - LULU - close 36.05 change -0.27 stop 43.10
Target(s): 35.25, 34.05, 33.00
Key Support/Resistance Areas: 42.25, 39.75, 37.00, 35.16, 32.75
Time Frame: 1 week
7/6: LULU came within 15 cents of hitting our trigger to enter short positions today, and then reversed down. The stock has faced a barrage of selling recently and is coming into a prior support/resistance area near our first target of $35.25. If the stock keeps testing this area the support should eventually break. I only wish LULU and the market were not so oversold. I am expecting this stock to bounce, maybe even up to its 50-day SMA which is near $40.00. Considering the conditions I would like to raise our entry back to $39.25 (below the 50-day SMA). If we are patient and get a good short entry it should pay off.
7/1: LULU has been whipsawing in a wide $10 range for past 3 months and I think it is ready to let go to the downside. When it happens it should let go fast. LULU is maintaining one last trend line from its 7/09 lows to its 2/10 lows. But I'm not too concerned about this trend line holding in today's market conditions. The retail sector is weak and LULU trades at a high P/E. The stock is below its declining 20-day and 50-day SMA's and there is a lot of congestion to keep any bounces under control. I suggest initiating short positions into strength. $39.25 provides an ideal entry point which we will use a trigger to enter short positions. I will also add that more conservative traders may want to wait until LULU tests its 50-day SMA from below which also corresponds with the back side of its most recent trend line that broken this week. We'll place an initial wide stop at $43.10 to account for volatility and will adjust it once we are in the position.
Suggested Position: Short LULU stock if it trades up to $39.25
Option Traders: Buy August $35.00 PUTS if LULU trades to $39.25, current ask $2.80, estimated ask at entry $1.60
Entry on July xx
Earnings 9/9/2010 (unconfirmed)
Average Daily Volume: 1.89 million
Listed on July 1, 2010
Starbucks Corp. - SBUX - close 23.61 change -0.73 stop 26.31
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:
7/6: SBUX came with 6 cents of our trigger to enter short positions and then proceeded close down -3.04%. I'm expecting SBUX to bounce with the broader market so I suggest being patient and ready to short the stock if it trades to our trigger of $24.75.
7/3: 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 $2.20, estimated ask at entry $1.50
Entry on June xx
Earnings 7/21/2010 (unconfirmed)
Average Daily Volume: 10 million
Listed on July 3, 2010