Dow Falls 230

Add BEN and CMTL Puts

By Bryan Bottarelli
Thursday, July 26, 2007 11:38 AM EDT
Thu, 26 Jul 2007 15:38:00 GMT

Dear Bottarelli Research Member,

The Dow is now down 200 points as I write — taking it right down to the critical 50-day moving average. If this level ruptures, then we’re in for a free-fall that could very well shave 700 points off the Dow’s current value. So in situations like this, nothing matters: Not value, not growth, not ratios, nothing. All that matters is that investors are aggressively selling shares, so let’s continue playing downside puts — especially on companies that have already broken below their critical support levels. I’ve isolated two such opportunities below:

INDU

The first is Comtech Telecommunications (CMTL – NASDAQ). The high-tech mobile data communications firm looks ready to drop down to $40.00 per share before finding a support point, so let’s enter August puts now!

CMTL

PLAY: Buy the CMTL August 45 Puts (CQH TI) at or under $2.60, good for the day. Place a protective stop loss at $1.50.

The second company breaking under its 50-day MA is Franklin Resources (BEN – NYSE). Although the company reported today that Q2 profits rose 30%, the money manager is being lumped into the financial sector that’s experiencing unprecedented weakness — and thus the stock has dropped over $5.00 in today’s trading. As you can see, the downside could extend a lot further, so let’s enter BEN puts now!

BEN

PLAY: Buy the BEN August 130 Puts (BEN TF) at or under $3.80, good for the day. Place a protective stop limit at $2.30.

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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