Take STP Profits!

Book a 21% One-Day Gainer

By Bryan Bottarelli
Thursday, January 04, 2007 1:56 PM EST
Thu, 4 Jan 2007 18:56:00 GMT

Dear Bottarelli Research Member,

As expected, all the major oil names continue to get clobbered. As you can see below, the Oil Services HOLDRs (OIH) is down another $3.00 today as oil now trades under $57 a barrel. Anytime oil dipped under these levels in 2006, the next week (or so) witnessed a strong snap-back, so I really think the time is coming for an upside oil play. As always, you’ll be the first to know the moment it’s time to act. For now, let it keep dropping.

OIH

In the meantime, let’s go ahead and take our one-day profits on Suntech Power Holdings (STP – NYSE).

The STP February 35 Puts (STP NG) that we entered this morning for $3.70 have just hit a high of $4.40, good for a 18.9% gainer. If they tick up to $4.50, that would represent a 21.62% gain in a mater of hours, so let’s go ahead and lock in those profits, good for the day.

STP

PLAY: Sell your STP February 35 Puts (STP NG) at or above $4.50, good for the day. If prices do not execute at or above $4.50 by the close of today’s trading, keep your orders open into tomorrow.

Another odd trading pattern today comes in the form of Norfolk Southern (NSC – NYSE).

NSC

With oil prices dropping so substantially, you’d expect to see a big lift in rail stocks like NSC — but that’s certainly not the case. This tells me that the transports are especially week, even with reduced oil prices, which could lead to even more weakness. Keep a close eye on NSC for a pending downside put play. Until then…

Lock and load

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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