In This Edition....

• New Trading Ideas: Quicksilver (ZQK) and Thor Industries (THO) 
• Open Trade Updates: Sell Oramed Pharmaceuticals (ORMP), What To Do With Citi (C) 

New Trading Ideas

As usual, we've got a bullish and bearish play for you. However, we've added a couple of unofficial bullish items to think about.

Quicksilver Inc. (ZQK) - Bullish/Long

It looks like Quicksilver may have finally shrugged off its problems for good.... the company as well as the stock. 

Despite lots of volatility, investors continue to show optimism for the surf apparel manufacturer in the form of higher highs and higher lows since November of last year. That's roughly when the company managed to convince the market and itself that the losses in 2007 and 2008 weren't a permanent condition. As a result, the buyers have been flowing back in. 

Given that ZQK lost more than 80% of its 2007 high value, there's a lot of room for upside here. But, it will take time to realize the full potential; don't be surprised if Quicksilver turns into a long-term play for us. (The forward-looking 12 month P/E here is 11.7, if that tells you anything about the timeframe we're considering.) 

Nevertheless, it's the recent push off a support line and slowly-increasing buying volume telling us now's the time to get in - ahead of most of the crowd. 

By the way, COMS and DSCO were both considered as today's possible buys, but ZQK won the day. All three are worthy though. 

Side note: We visually and mechanically scan lots of stocks for potential buy recommendations. Though we didn't pick one for today's bullish idea, you may want to know that REITS easily topped all of our sorts and scans in terms of sheer volume. When the whole group is sending the same message, there may be something to it. We'll explore the industry's tickers in a future edition, but it may be worth a little DD on your own in the meantime. 

Thor Industries Inc. (THO) - Bearish/Short 

Betting against the recreational auto industry is a pretty aggressive stance, considering the way the market's fallen in love with these stocks with just the mere prospect of green shoots. However, with the stock's price more than doubling since March, odds are low that Thor will actually be able to meet those lofty expectations. 

The big clue that THO peaked and reversed in early August is the August 5th bar... the stock hit a new multi-week high that day, but the volume peak actually came the day before. Since then, it's been nothing but downhill. 

There's a bastion of support around $25.50, and if it breaks, THO has nowhere to land for a while. Since the selling volume has been relatively significant though, we're going to go ahead and preemptively take on a short position. 

Like we said, this is a high-risk, high-reward idea, and based on the assumption that Thor will continue to fall short of earnings and other expectations. 
 

Open Trade Updates

Note that we have one exit notification today. All the other updates are only adjustments or observations. 

Citigroup (C) 

You gotta' love it. We recommended Citigroup back in late July at $2.88, and here it is now at $4.69... a 62.8% gain in less than a month.

I suspect/hope some of you took partial profits back when we mentioned it on the 6th; shares were up 28% then. Whether you held all or half of your C from then though, you're still doing pretty well with it.

At this point, part of me wants to lock in the gain on other half after seeing the chart roll over a bit today. Yet, I think Citigroup is a great way to play the ongoing 'bigger picture' recovery of the financial sector. 

I recommend you raise your stop to somewhere around the $4.00 area just in case this reversal effort takes hold, but that's strictly a defensive posture. I still feel there's more upside to go, and we'll keep the trade on the table. 

NCI Building Systems Inc. (NCS) 

A few days after we issued our long/bullish trade for NCI Building Systems, Standard & Poor's came back with a credit downgrade of the company essentially reflecting a default, fueled by actual threats from the company that if some key debt/note terms weren't modified, NCI would get them modified anyway... via a bankruptcy.

Tough talk, but the reason the stock didn't get trashed in the wake of the news was that it really wasn't news. Those problems were pretty much baked into the price.

Don't get me wrong - we're still in the hole a little bit, but we wanted the trade then for the same reason we still want it... the future looks better than the past. The forward-looking P/E is still a plausible 4.8 under the current debt terms, and the bankruptcy threat may be more bark than bite.

American Greetings Corp. (AM) 

This is one of our most recent trades, but I'm already mulling an exit of this short position.

American Greetings shares were supposed to keep heading downward after getting way over-extended in late July. As it turns out, AM started to creep higher about the time we jumped in as bears.

I'm not really worried yet though.... at least not worried enough to pull the plug. Why? Because the closing levels yesterday and so far today are clinging towards the bottom end of the range, hinting that investors are selling as fast as they're buying - at least for today. Plus, the volume behind the recent rebound has been pretty weak.

We'll stand pat for now. 

RealNetworks Inc. (RNWK) 

Remember last week when we said RealNetworks shares were pushing their luck by pressing down into a key support level? Yeah, well, let's turn that around completely... RNWK is running into a major resistance line again. 

I have no reason to believe we won't see what we've seen a few times now with this bullish trading range - RNWK is apt to pull back from that resistance line. 

It's a roller coaster in the meantime, but the two steps forward and one step back routine is generating unrealized gains faster than you might think.

Oramed Pharmaceuticals Inc. (ORMP) 

This is the one we suggest you make an exit on, not because anything's wrong with the company, but because the trade has become a distraction rather than an asset. By letting go of the trade, we free up money as well as focus.

Assuming you get out at the current price of 50 cents, you should be out with a decent gain from our May entry. 

That said, though we're not going to follow the stock anymore, you may want to. The bulk of their work has been the development of an oral insulin for diabetes patients. It looks pretty promising, but being in Phase II trials means the necessary timeframe is going to be longer than we can devote to it. 

That's it for today, but stay tuned - we'll have a market update for you within a few days.