Bear Call Spread-23 Feb 07

Sell Mar 100.00 call$0.85
Buy Mar 105.00 call$0.30
Return $0.55
12.36%


Technicals: The stock hit a 52-week low of $49.25 back in March and then began a long-term rally that resulted in January 52-week high of $109.45. This new high was the result of the prices breaking out of a Symmetrical Continuation Triangle. This chart pattern is considered to be a bullish signal as it indicates that the current uptrend may continue and that is just what took place. As the target price was hit the stock has reversed direction slipping back below a former area of resistance. In other words, when prices did finally come back to test old resistance as new support the stock failed to find support and has now fallen below its 30-dma as well as the trendline. The stock trades in the services/casinos & gaming industry which is trading near its yearly high prices. However, its fundamentals are weakening. The MACD’s are showing a sell signal while the Stochastics are revealing a buy. We’ll expect overhead resistance around the $96 level to hold and keep prices below the lower strike price over the next few weeks.