A Series of Set-Ups

Plus, TIE is Worth the Wait

Dear Bottarelli Research Member,

First off, I’d like to congratulate those Charter Members who hung in there with Titanium Metals (TIE – NYSE) It was a nail-biter, for sure, but I just knew that the stock was a coiled spring just waiting to pop — and today’s move was exactly what I was waiting for. As I write, the TIE February 30 Calls (TIE BF) that we were holding with a cost basis of $2.00 have traded as high as $3.10 today, good for a very nice 55% gainer. Although the charts indicate that TIE could run all the way up to $34, I think it’s time we take our money and run! If you haven’t already done so, take your TIE profits now!

As we look ahead to next week’s trading, a number of potential trading set-ups have surfaced today that I’d like to make you aware of. As I mentioned in this morning’s alert, now that the major oil earnings are behind us, we could get positioned in a number of strong upside candidates. Topping the list is Valero Energy (VLO — NYSE), which is absolutely blasting to the upside. If VLO experiences any dips, it may be time to enter some upside calls. Also on the short-list is Diamond Offshore Drilling (DO — NYSE), Oceaneering International (OII – NYSE), and even Schlumberger (SLB – NYSE). I’ll keep a close eye on everything and tell you when it’s time to act.

In the meantime, we have a series of other set-ups that could equate into new play opportunities. Topping the list is Celgene Corporation (CELG — NASDAQ), a company that I consider the most promising publicly-traded biotech on the markets. As you know, Amgen (AMGN – NASDAQ) just experienced a major gap-down that pushed the entire biotech sector lower (see below).

But what caught my eye is the resilience that was displayed by CELG during this sector-wide weak period. As you can see, CELG has been drifting lower — but has just recently found a strong support level. Since this upside support is coming at an overall weak period for Amgen, this signals that CELG could be moving higher in the next few weeks. Based on this strong signal, I’d like to establish an upside position today in CELG.

PLAY: Buy the CELG March 55 Calls (LQH CK) at or under $3.00, good for the day. Current bid/ask spread is $2.75 to $2.85. Place a protective stop loss at $1.60.

Also drifting higher is automotive parts and accessories retailer AutoZone (AZO – NYSE). After AZO registered a new 52-week high, I did some due-diligence on the auto-part sellers — and it came as quite a surprise to learn that they’re one of the strongest retail segments right now. With 3,771 stores across the United States, it goes without saying that AZO is the dominant player in this field. I’m considering adding a longer-dated position — perhaps the June 130 or 135 calls — but I’ll let you know when the timing is right. For now, let’s hold off.

Another new 52-week high was just set in India call-center leader Infosys Technologies (INFY – NASDAQ). Headquartered in Bangalore, India — INFY continues to drift higher on the strength of outsourcing.

At the same time, a smaller firm called Wipro (WIT – NYSE) is also showing signs of future upside momentum, as they have established a presence in India, Asia Pacific, and the Middle-East. At only $17 a share, WIT could be a mini-version of INFY — which offers us the most bang for our buck. For only $1.50 per contract, the WIT June 17.5 Calls (WIT FW) could be a position we enter into next week.

And finally, there are indications that Gmarket (GMKT – NASDAQ) could be setting up to make an upside rally. Based in based in Seoul, South Korea, GMKT’s e-commerce platform has more than 8.6 million registered users — who buy everything from beauty products, computers, electronics, child care/food products, furniture, jewelry, sporting goods, and even automobile accessories products. To me, it looks like GMKT is a combination of Dell, Amazon, Tiffany, Best Buy, and Dicks Sporting Goods all wrapped up into one little company. I’m looking at the June 22.5 calls (QMF FX) which currently trade between $3.10 and $3.60, but I think we can get better entry prices if we wait a little longer.

So as always, I’ll be watching all these potential set-ups — alerting you the moment it’s time to make a play. Until then get positioned in CELG, and as always…

Lock and load!

Sincerely,