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New Plays
Long Plays
Short Plays
None ACAS
  DOV
  DRI

Play Editor's Note: After Friday's big sell-off I'm expecting an oversold bounce but would use it as an opportunity to open new bearish positions.


New Long Plays

None today.
 

New Short Plays

Amer.Capital Strat. - ACAS - close: 30.95 change: -0.93 stop: 32.51

Company Description:
American Capital is the largest U.S. publicly traded private equity fund and one of the largest U.S. publicly traded alternative asset managers that is a member of the S&P 500. (source: company press release or website)

Why We Like It:
The sell-off in ACAS has been a little bit slower than the rest of the financials but the trend is still down. This is a stock that readers could short right away. Or if you prefer wait for another failed rally under $32.00 since the financial sectors are so oversold and due for a bounce! We want to aim for the January 2008 lows so our target is the $26.50-26.00 zone. We're suggesting a stop loss at $32.51 but you might be able to get away with a tighter stop closer to $32.00. The P&F chart is bearish with a $22 target. FYI: It is important for readers to note that ACAS has above average short interest. A lot of investors have seen the trend and they're piling on. The most recent data listed short interest at 15.5% of the 199-million share float. That is more than a week's worth of short interest and raises the risk of a short squeeze.

Picked on June xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 07/31/08 (unconfirmed)
Average Daily Volume: 2.4 million

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Dover Corp. - DOV - close: 51.93 change: -2.05 stop: 54.51

Company Description:
Dover Corporation, with over $7 billion in annualized revenues, is a global portfolio of manufacturing companies providing innovative components and equipment, specialty systems and support services for a variety of applications in the industrial products, engineered systems, fluid management and electronic technologies markets. (source: company press release or website)

Why We Like It:
This is a much more aggressive bearish play. DOV has been a huge relative strength winner over the past couple of months. Yet the bulls ran into trouble around $54.00-54.50. Now DOV's chart has a potential double-top pattern with the July 2007 peak and the May 2008 peak, which is bearish. Traders could short it now but we think the markets might see a bounce on Monday. Our suggested entry point for shorts on DOV is the $52.75-53.00 zone. If triggered our target is the $48.00-47.50 range. The stock does not have a lot of short interest that we know of.

Picked on June xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 07/23/08 (unconfirmed)
Average Daily Volume: 1.8 million

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Darden Rest. - DRI - close: 32.16 change: -1.68 stop: 34.81

Company Description:
Darden Restaurants, Inc., headquartered in Orlando, Fla., is the world's largest full-service restaurant company with almost $6.7 billion in annual sales and approximately 180,000 employees. The company owns and operates more than 1,700 restaurants including Red Lobster, Olive Garden, LongHorn Steakhouse, The Capital Grille, Bahama Breeze and Seasons 52. (source: company press release or website)

Why We Like It:
The U.S. is in an economic slowdown. The U.S. consumer is probably eating out less as they pay more for gas at the pump. That's not good news for DRI. Technically things look very bearish. The stock has broken down from a five-month bearish wedge pattern. The oversold bounce in late May failed under $35 and its 50-dma. Honestly, we're tempted to just short it right here. However, the selling on Friday stalled at its 100-dma. We think DRI might bounce. Instead we're suggesting readers short DRI on a bounce back into the $32.90-33.50 zone. We're setting the stop loss at $34.81 but you might be able to get away with a stop closer to Thursday's high near $34.50. We have two targets. Our first target is $30.10. Our second target is $27.75.

Picked on June xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 06/24/08 (unconfirmed)
Average Daily Volume: 2.0 million
 

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