Friday Wrap-Up

CMC, APC, PEG, AMZN, ATI, and SPY Updates

Dear Bottarelli Research Member,

As we close out the trading week, we find most of our open positions sitting right at our entry levels. Our AMZN June 60 Puts (ZQN RL) in particular have been all over the map today – as the stock has high as $63.84 and as low as $60.62. This has increased the value of these puts as high as $3.30 and as low as $2.10. As I write, they’re currently trading exactly at our $2.60 entry price – but I suspect that we’ll get the necessary downside pressure to close these puts for a profit early next week.

Case in point, just look at this chart. A 40% stock rally over a three-day time horizon is simply not sustainable – and as soon as the day traders lose interest in AMZN I believe it’ll settle back down to more realistic price levels. All we need is a $5.00 down move to witness an explosive put winner, so maintain your AMZN June 60 Puts (ZQN RL) into next week.

Another stock that appears to be setting up for its next upside push is Commercial Metals (CMC – NYSE).The stock was in the news after the Croatian Privatization Fund and the Croatian government accepted a winning bid from their Swiss subsidiary for a Croatian steel mill called Valjaonica Cijevi Sisak (VCS). CMC believes this mill can produce up to 305,000 metric tons of steel pipe annually – and owning the mill helps CMC’s expansion strategy in key markets of Central and Eastern Europe.

As you can see by the chart, the stock didn’t really react to the news – which leads me to believe that the current up-trend will remain in tact. Maintain your CMC June 35 Calls (CMC FG) into next week.

Anadarko Petroleum (APC – NYSE) is another position looking to expand on their recent upside rally. The company is set to announce earnings on Monday April 30^th (time not supplied) so that could be a catalyst for more upside gains. In addition to that, I’m hearing chatter that a private equity firm is about to move on APC – and any news of this magnitude could push shares aggressively higher. With the APC June 50 Calls (APC FJ) so cheap at $1.05, I’d like to try to hit a big winner here — so maintain these calls into next week as well.

The one position that caught us by surprise today was Public Service Enterprise Group (PEG – NYSE).The chart shows that PEG blasted up past $92.50 in yesterday’s trading, but I didn’t see this move – nor did this upward pricing get reflected in our PEG June 90 Calls (PEG FR). As you know, I would have taken our profits off the table on such an upward move, but as it stands the position has been stopped out.

Despite this down-tick, I must admit that the chart continues to look rather strong – and I remain bullish on the energy and natural gas sectors going into summer. I’ll keep monitoring PEG to see if support is established and a possible second entry opportunity comes up.

Looking at Allegheny Technologies (ATI – NYSE), it appears like the brief two-day selling pressure is over and the stock is setting up for another upside run at $120. As a result, maintain your ATI June 115 Calls (ATI FC) into next week.

And lastly, the major market averages continue to creep higher, but let’s not lose sight of the fact that there is tremendous risk for a downside move at these elevated levels. As a result, I definitely want you to maintain your protective SPY June 150 Puts (SYH RT).In fact, if we see any sort of “blow off top” next week, I’ll look to take profits on our call positions and add more of protective SPY puts to our ledger.

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