Dear Bottarelli Research Member,
First and foremost, I’d like to once again welcome you to Bottarelli Research.
You’ve made a smart decision to become a Charter Member, because this is not just another trading service. Rather, you’re now part of a tight-knit group of traders who will soon be learning some of the most powerfully lucrative trading secrets ever revealed to the public. I sincerely hope you’re as excited as I am, because this is going to be quite a ride.
Ok, so let’s get started. As part of this exclusive new trading group, you’ll soon be receiving email alerts, just like this one, that recommend, update, and review your trades.
Starting next week, we’ll begin by getting positioned in a few new trades that look to make between 25% to 75% in short order. What we’ll do is use the most conservative of the five trading rules, just to get your feet wet. Then, as you become more comfortable with the system, we’ll proceed to turn it up a notch.
You may notice that there are currently two trades marked as “open” in the trading ledger. Allow me to quickly comment on each trade.
The first open position is a company called eCollege.com (ECLG – NASDAQ).
The company is a great little outfit here in Chicago that provides the technology that allows colleges and universities to offer classes online. eCollege.com also sells their online courses to corporations who use their software to design and implement online training courses for employees. As you know, continued education and continued business training is quickly becoming huge business, and ECLG is one of the leading educational software companies.
On January 10th, I called them a “true gem” after the stock triggered a series of all time new 52-week highs. Based on that, I recommended buying the ECLG March 20 Calls (EGU CD) for $1.80.
As you can see by the chart, the stock has been in a very nice up-trend.
Just recently, ECLG was named to Forbes’ list of 25 Fastest Growing Technology Companies for third consecutive year. Today, they squeaked out another new 52-week high at $20.99 before closing the day slightly in the red. Right now, the March 20 calls trade for $1.90, a little above my original entry price.
The second open position is a truly innovative company called Intuitive Surgical (ISRG – NASDAQ).
They manufacture an amazing operation technology called the Da Vinci Surgical System, which allows doctors to make prostate operations remarkably non-evasive and incredibly accurate. Over the last year, the stock has gone from $40 up to $140. That’s a 250% gain.
But recently, the stock has sold off. Big time. Look at the chart:
Why the huge fall? ISRG just reported earnings. And by all counts, they were blowout numbers. They reported net income of $49.5 million, or $1.31 per share, up from $11.7 million, or $0.32 cents per share, a year-ago. That’s remarkable.
But here’s where the trouble came. When it comes to earnings reports, Wall Street wants companies to not only beat expectations, but they also want them to raise their guidance. The combination of both items is when you see a huge stock up-day. Although ISRG blew away earnings expectations, they forecasted fiscal 2006 revenue in a range between $284 and $307 million. Since the consensus estimate was already $307 million, this was taken as the company not raising their guidance — and thus the massive sell-off.
In my view, this was completely unwarranted. After all, if you look at ISRG’s announcement history, they always offer conservative initial guidance and then increase their projections during the year. That way, they’re giving investors a more accurate look at their numbers, instead of telling Wall Street what they want to hear. Unfortunately, Wall Street didn’t take too kindly to this — and the stock got nailed. I called it a buying opportunity.
Citing this rationale, I entered a trade on February 3rd and again on February 6th. Both trades were very, very aggressive recommendations to buy Intuitive Surgical March 115 Calls (AXQ CC).
Now, as a new Bottarelli Research member, I don’t want to you buy either position.
At least not yet.
Like I mentioned above, I want us all to start off on the same foot. That means we’ll make all new recommendations — not pick up old ones half way through their cycle.
Nevertheless, I wanted to give you a taste of what’s currently open. And once again, I wanted to welcome you to this new and exciting trading group.
We’ll be in touch next week.
And like I always say, it’s time to “lock and load.”