A Quick Short Play

WYNN Looks to Cool Off

By Bryan Bottarelli
Thursday, January 18, 2007 10:16 AM EST
Thu, 18 Jan 2007 15:16:00 GMT

Dear Bottarelli Research Member,

The markets have opened the day showing weakness across the board — fueled by shares of Apple Computer (AAPL – NASDAQ) dropping $5.00 after their forecast for the second quarter came in $0.04 to $0.06 under analyst expectations.

Never mind that they’ve sold as many iPods since October of 2001 as there are residents in the state of Texas (an astounding statistic), it’s clear that Wall Street still places 100% of their emphasis on forward projections. And therefore, Apple is experiencing extreme weakness today that’s dragging down virtually everything on the NASDAQ.

AAPL

Perhaps this could hand us a buying opportunity in Apple — especially if they find support at their 50-day moving average. I’ll continue to follow the stock for any trading opportunities.

In the meantime, it’s probably a good idea to balance out our call ledger by establishing a short position. And from what I’m seeing, it could be time for Wynn Resorts (WYNN – NASDAQ) to give back a little bit of its recent run-up.

WYNN

You see, WYNN tends to experience upside rallies that last 5 to 11 trading days — which are then followed by 3-4 days of selling pressure. As you can see by the chart, WYNN has just enjoyed 11-days of upside, but yesterday marked the first red candlestick formation — signaling that WYNN could soon be taking a breather. Let’s capitalize on a near-term drop to make a quick profit trading February 105 puts. Here’s the trade:

PLAY: Buy the WYNN February 105 Puts (UWV NA) at or under $4.60, good for the day. Current bid/ask spread is $4.30 to $4.40. Place a protective stop loss at $2.90.

I’ll be out with further advisories as the day progresses — but until then…

Lock and load

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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