What a Week

Fed Decision & Terrorism

By Bryan Bottarelli
Friday, August 11, 2006 10:44 AM EST
Fri, 11 Aug 2006 15:44:00 GMT

Dear Bottarelli Research Member,

It was once again an eventful week of trading — as we close the books on a week that witnessed a critical Fed decision and a foiled international terrorism plot. So as we begin today’s trading with the Dow 32 points down, I’ll quickly address our positions — plus highlight what we could trade early next week.

First off is our TXU September 65 Calls (TXF IM). Since entering these calls for $2.80, they’ve slipped in value as TXU has drifted a little lower to close the week. With the utilities the strongest sector in Dow, I’d like to make sure we maintain this position into next week. Therefore, I’d like you to cancel your $1.90 stop loss order — just for today — to ensure that we’ll continue to own this position. In fact, I may have you add to these calls next week at lower values, as TXU’s chart continues to look strong (even despite the slight retracement we’ve witnessed).

TXU

PLAY: Cancel your stop loss on the TXU September 65 Calls (TXF IM) to ensure that we’ll own them next week. I may add to the position in next week’s trading.

Also, let me quickly follow up on our two put plays. First off, if you didn’t get off your sale of the BZH September 40 Puts (BZH UH), then definitely sell them today — as the stock is dropping once again in early action. Also, make sure to take your profits on the WHR September 75 Puts (WHR UO) for the best prices you can — as WHR is also dropping in early action. If you’re still holding these puts, take profits on each position today!

I’m also watching the CSX November 65 Calls (CSX KM) and the CAT November 75 Calls (CAT KO) very closely. Both longer-term calls have gotten really hammered since we sold them — which means we could now have a super-attractive entry prices.

CSX

Like I mentioned, I rarely initiate new positions on a Friday (due to weekend time decay), but I’m awfully close to initiating new recommendations in each of these calls early next week. As you can see from the charts, both CSX and CAT are reaching critical support points that could lead to upside rallies.

CAT

Keep a close eye for these trades early next week. And as always…

Lock and load

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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