They’re Selling the News on Deere

Big Time!

By Bryan Bottarelli
Wednesday, May 16, 2007 10:59 AM EDT
Wed, 16 May 2007 14:59:00 GMT

Dear Bottarelli Research Member,

The markets have only been open for 90 minutes and it’s already been a very volatile day for shares of Deere (DE – NYSE). The session began with shares of heavy equipment maker opening at an all-time high after the company reported better than expected first-quarter results. But sometimes “better than expected” is not necessarily a good thing.

You see, Deere’s profit dropped 16% from last quarter — but this still came in less than Wall Street’s forecast. Originally this news sent shares of Deere up to a new high at $122.50, but then investors realized that they were buying the news of a “profit decline.” And this led to the opposite effect: A major ‘sell on news’ situation. Just look at today’s chart:

DE

As you know, I’ve followed the movements of Deere for quite some time. I really like the company, in fact. But if today’s news can’t propel the shares any higher, then the writing is on the wall — and the sage is set for a pullback. Let’s take advantage of any further weakness by adding DE puts now.

PLAY: Buy the DE June 120 Puts (DE RD) at or under $4.60, good for the day. Place a protective stop loss at $2.50.

Also moving in our direction is Intuitive Surgical (ISRG – NASDAQ).

ISRG

The stock is down over $2.00 as I write, which has pushed your ISRG June 130 Puts (AXQ RV) from $4.40 all the way up to $5.40. Hold for more gains.

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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