LEAP Wireless - LEAP - close: 27.24 change: -1.84 stop: 29.45

Why We Like It:
LEAP is showing a lot of relative weakness. The late June-early July sell-off broke the neckline to a potential head-and-shoulders pattern. This past week while the market was in rally mode LEAP has been churning sideways. Today saw a 6% decline on above average volume. The P&F chart has turned bearish and broken support at the 200-dma and the $30.00 level are now new resistance.

I am suggesting readers use a trigger at $26.80 to buy puts. LEAP has a trading range from $26.90 to 29.40 and we want to catch a breakdown. More aggressive traders may want to jump in now. Our first target is $22.65. Our second target is $20.25. The $22.50 level could be strong support so I suggest readers take off most of their position there.

Suggested Options:
I am suggesting the August puts but we will plan to exit ahead of the early August earnings report.

BUY PUT AUG 25.00 UAO-TY open interest= 410 current ask $1.10
BUY PUT AUG 22.50 UAO-TX open interest= 644 current ask .45

Annotated Chart:

Picked on     July xx at $ xx.xx<-- see TRIGGER
Change since picked:      + 0.00
Earnings Date           08/06/09 (unconfirmed)
Average Daily Volume =       2.2 million  
Listed on  July 16, 2009