New longs:  AFAM 36.12

Last time this stock traded above 36 was on 2/22.  Looking for some volume to accumulate.  I still believe the demand for home healthcare is very high.  Industry is strong, hope I’m not wrong.

K, going surfing or fishing, or whatever.  I just need to get out of the office!

Wow what a stock.  I can’t help but noticed how overbought this company is, but then again, it’s been ripping apart the shorts for over a year now.  This stock is a good example of how overbought indicators do not always work.  Would I buy here?  H-no.  This one is easy to play:

 

 

1)  long now

2) OTM-PUTS 3-6 months out

Then you can get fancy buy playing what I call the timed-bearish-put-strangle.  That means given a principle investment =x, buy .75x of puts now, and .25x of calls on the next major pullback.  I love this play, and it rarely occurs.  It’s like losing money to make more money.  I’ll create the strategy and post some feedback over on The PPT.

Meanwhile, my other retail pick, JCG, had a great conference call, but it looks like it is pulling back here.  Let’s watch this for a while.  Keep a sharp eye on those retailers.  They have been oddly bullish during an economic downturn. 

The Dress Barn, Inc. (DBRN: 27.03 +0.33%)

Ross Stores, Inc. (ROST: 52.92 +0.59%)

(DEST: 24.77 -1.00%)

(GPE: 0.00 N/A)

New shorts:  ACH 26.37 

Strategy is simple here, 1/4 now, 3/4 <26.  This is more of like getting your feet wet kind of shorts.  Haven’t done it in a while in this sector.  Other signs to short stocks is that the Lakers lost 3 games in a row.  That seems to put me in the mood for shorting stocks.

Stocks to watch:

TZOO- major short squeeze today.  Travelzoo Inc. (TZOO: 14.63 +1.39%)

TEAR - small cap manipulation.  The good ol days!

RIMM - legit rally

ZANE - up like a billion % in the past 5 days.

Just watching to see which sectors are not moving during today’s end of the week rally.  I’ve been carefully watching the coffee stocks, and I believe they are showing lack of buyer interest.   That means money should be moving somewhere else.  I expect a gentle pullback in the industry, but one worth a conservative short play.

-  Use GMCR as guide.  Begin first step of shorting or selling of longs with GMCR < 85, then under 82.  GMCR is quite high on the IBD 100, but I expect it to drop a few places when we start to detect faster growing sectors like Home Health Care, and other “well-being” companies.

-  CBOU is a momentum play that did well in 09.  Look for it to pullback on low volume.

-  Use SBUX as a hedge.  Go long at 1/5 rate of short position.  You can’t really argue with SBUX management.  They know how to cut back on stores without cutting back in earnings too much.  Their diversification into other products kind of concerns me though.  Coffee to go may canibalize sales, and McDonalds Cafe campaign is actually a threatening force.  SBUX is one to watch.

Chesapeake Energy Corporation (CHK: 25.64 -0.58%)   - flagging.  More bullish though, but paying attention to bottom of flag.

Petrohawk Energy Corporation (HK: 22.19 +2.21%)   -  monster short candidate if oil < 74.xx    … very bearish overall chart.   Strong short candidate under 21.  Volume thinning on weak triple bottom.

Hercules Offshore, Inc. (HERO: 4.70 0.00%)   -  I’ll play the villain here.  Small cap stock can be deadly for the medium term shorters, so either go long term, or short on the spike.

Verdict:  Thus far, I’m leaning on shorting any “seasonal moves” on oil.  Despite oil trading near $80, I see it as an opportunity to short speculators betting on a repeat of 08.

This unique medical stock has strong fundamentals, and a very nice jump in QOQ earnings.  That’s usually something quite rare in this industry.   The PPT puts (HITK: 25.75 -3.38%) at an appealing hybrid score of 4.18 as of Tuesday’s close.  Meanwhile I think it’s 3-month chart is interesting.

  After a pullback from year highs, HITK found a floor at 20.  HITK tested 24 yesterday right at the 20-day which usually leads to a slight pullback as it did today.  So, that gives us a nice entry window between 20-23.xx.  If HITK can’t hold 20, then we have a nice H&S short candidate with entry <20.  So for now, I’m waiting for volume to pick up to bring this stock to new highs.  It’s quite important to get volume here because it is  a small capper, and volume is the blood of momentum.

Happy trading!