Dipping a Toe In

A Quick Opportunity for TSO Calls

Dear Bottarelli Research Member,

We kicked off this morning’s trading session by analyzing the status of the current market levels — and concluding that the best tactical strategy is to “Let the market do the talking.” As I write you with less than one hour left in the trading session — the Dow has just popped up to a 67-point gain, so instead of judging the merits of this late-session advance, I’d like to profit off it. And this warrants dipping a “toe in the water” on the call side on one of the strongest stock candidates that I highlighted earlier for you: Tesoro (TSO — NYSE).

A couple of things are happening today for TSO — and these events form the bullish catalysts that I often times scan for. In fact, today’s trigger in TSO is very similar to what prompted us to play Marathon Oil (MRO – NYSE) for a quick gainer, so let’s keep riding this short-term winning strategy. Specifically speaking, it was announced this afternoon that Tesoro gave the “ok” on a 2 for 1 stock split (bullish) and simultaneously raised their quarter dividend (also bullish). At the same time, Marathon Oil just reported earnings of $2.07 per share, which beat The Street’s estimate of $1.93 per share. This strong number could prove to be the third bullish catalyst leading up to TSO’s May 3^rd earnings announcement. Graphically speaking, here’s the TSO chart:

All things considered, I’d like to carefully add some short-term TSO calls to our ledger today. I plan to ride a quick momentum hit going into this week’s earnings announcement and shoot for a near-term winner. Here’s the trade:

PLAY: Buy the TSO June 130 Calls (TSO FF) at or under $3.50, good for the day. Current bid/ask spread is $3.20 to $3.50. Place a protective stop loss at $2.00.

Over on the put side of the ledger, let’s keep a close eye on Monsanto (MON – NYSE). The stock is down today — probably as a reaction to news from Archer Daniels Midland (ADM – NSYE) who reported fiscal third-quarter net earnings of $0.56 a share, which came in $0.06 under the Thomson Financial estimate of $0.62.

As I look at the MON chart, you can see that MON tends to move in 7 to 10 day increments — meaning both their upside and their downside trends last well over a week. If we’re now in day #2 of this new downside trend, we could see a move down that fills the gap at $56 and even dips down to $52. This is certainly put candidate for this week.

Another bearish formation comes from Public Storage (PSA – NYSE). It’s always a bad sign to see the stock selling off in advance of an earnings announcement — and that’s exactly what’s happening today in PEG leading up to their May 3^rd announcement. As you can see, the stock has just today dipped underneath its 200-day moving average, which isn’t a good sign. If this level turns from support to resistance, PSA could fall even further. Not many people realize this, but the owner of “you store it” facilities across the country represents one of the most broad-based real estate plays out there — so any weak real estate figures look to hurt PSA. That’s why I consider PSA another put candidate for this week as well.

Also keep an eye on two of my favorite companies that report earrings tomorrow: Allergan (AGN – NYSE) and Transocean (RIG – NYSE).The market could hand us some potential trading opportunities in one of these stocks as well — so let’s see how tomorrow’s earnings will effect each of these names.

In the meantime, please allow me to comment on today’s Bottarelli Research Small Caps launch. I would like to formally invite everyone who is an active Bottarelli Research member to join this exciting new service — for I feel that small-cap investing is a perfect complement to our options trading. As one new Small Caps member put it, “small-cap stocks are like options that never expire.” That’s a wonderful analogy that explains the leverage and upside potential of small-cap investing — and today you can expand your investing arsenal by joining this small “group within a group.” On a personal level, the small-cap memberships are filling up much faster than I ever expected, so if you’re interested in joining this new group, I recommend that you move quickly. For all the details, please follow the link below:

A RARE LOOK INSIDE THE ELITE WORLD OF THE NATION’S BEST SMALL-CAP INVESTOR

After 6 Years of Negotiations, the Best Small-Cap Researcher in America Agreed to Publish his Picks Exclusively for Bottarelli Research.

Every Friday at 5:00 PM, You Will Receive New Picks that Could Explode +1,000% in 3-6 Months

Enrollment is Strictly Limited to Only 500 Members — STARTING NOW!

http://www.bottarelliresearch.com/small-caps/offer/O2710K2SYZ/

Have a good evening — and as always…

Lock and load!

Sincerely,