Take More Profits

Exit CSX and CAT Prior to Fed

By Bryan Bottarelli
Friday, August 04, 2006 10:33 AM EST
Fri, 4 Aug 2006 15:33:00 GMT

Dear Bottarelli Research Member,

Perhaps I’m being overly-cautions, but I think it’s a smart move to take our profits off the table on CAT and CSX prior to Tuesday’s Fed meeting.

As I write, your CSX November 65 Calls (CSX KM) and your CAT November 75 Calls (CAT KO) are each using today’s surprise market up-move to trade in the black. This up-swing is being fueled by news of a weaker-than expected job’s report, which leads Wall Street to believe that the Fed is done raising interest rates. But if we can learn anything from the Bernanke administration, it’s that you can never rely on them to help your investments. Therefore, I’d like to use this opportunity to take your profits off the table.

PLAY: Sell your CSX November 65 Calls (CSX KM) at or above $4.00, good for the day.

PLAY: Sell your CAT November 75 Calls (CAT KO) at or above $4.00, good for the day.

Now don’t get me wrong. I still LOVE the upside potential of both CAT and CSX. If you look at each chart, you’ll see that each stock still have a lot of room to run up. In fact, I may re-enter each position as early as next Wednesday (after the Fed, of course).

CAT

CSX

But for today, the smart and safe play is to take your gains off the table — and then enjoy your weekend! We’ll get back to it next week. Until then…

Lock and load

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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