Here’s the Plan

Gearing Up for the Next Round

Dear Bottarelli Research Member,

This past Monday, I told you that the market was a little over-extended at these levels — and I still feel this way.

As of this afternoon, the Dow was showing a 70-point loss, but that sell-off quickly turned into a mid-afternoon recovery. This proves that the bulls are remarkably resilient. In fact, as of yesterday, the NASDAQ was trading at a 5-year high — and that’s the concern.

The markets will probably take a breather before establishing the launch point for the next run-up — so it’s wise not to get caught up in the hoopla and buy stocks right at the highest levels. Trust me, I have plenty of powerful “lock and load” plays on my watch list (to be exact, I have ten plays I’m looking at), but I want to be completely sure that I’m not buying these high-flyers at their tops.

What am I currently looking at? First and foremost, I have two ethanol stocks on the radar screen that are exhibiting tremendous upside tendencies. By the looks of things, each of these stocks could rally all summer long.

Along the same lines, you have gas inventories coming down as we near the heart of the summer driving season, which means the refiners (which always tend to move at this time of year) should experience more upside gains.

Also, with oil closing in on $68 a barrel, the entire oil utility and shipping sector continues to look good. I’m watching a stock north of $100 that’s set to split, which as you know, I consider one of the most bullish signs of them all. I wouldn’t be surprised to see this stock split from $100 to $50 and then run right back up to $100 again. It’s that strong.

Also, as I’ve been saying all along, defensive companies, especially defensive aerospace, keep on rocking and rolling. These could be great longer-term plays.

Not only that, but our big winner on PTEN looks like it could be ripe for yet another upside play, along with two similar energy stocks looking to bust out of their recent highs. Each and every one of these plays could represent 50% to 100% winners — but it’s all a matter of timing.

On the downside, there’s a new chart I discovered that looks strikingly similar to Bausch & Lomb (BOL – NYSE),and you know the quick 33% profits we just took on that one. This could make for a strong downside put candidate that’s just as lucrative.

As far as today goes, I’m not 100% ready to issue any new trades. But I did want to let you know that there’s plenty of great stuff out there — it’s just a matter of pin-pointing the exact moment to “lock and load” our next series of winners. At current levels, I’m not convinced now is the time to pounce.

As for our three open positions, they all continue to look good. Your SPY May 130 Puts (SFB QX), which represent a board-based way to play the potential market downside, have traded as high as $1.60 today. You entered them for $1.55 and they currently trade for $1.35 Hold.

Your SMG June 45 Calls (SMG FI) have traded as high as $3.50 today, putting you in the black from your $3.20 entry price. As I noted in past alerts, the last three days have been very strong for SMG, which points to further upside to come. (*trading note: I was so encouraged by the SMG chart, I ran out to my local Ace Hardware yesterday and bought the biggest bag of Scott’s lawn fertilizer. How’s that for supporting your stock!?)

Finally, our longstanding play on diabetes supplied, BDX, is taking a breather after three solid days of upside strength, but I continue to like the stock’s potential as we move into the spring. Hold your BDX June 60 Calls (BDX FL).

If any of the potential plays I mentioned above give off a strong buy signal, I’ll look to issue one or two new trades tomorrow. My inclination is to enter one more call and one more put, and then hit it hard come early next week. Until then, you now have the inside track on what I’m thinking!

Lock and load!

Sincerely,