It Took a Little Dancing

ATI and CTRP Trigger

By Bryan Bottarelli
Friday, June 08, 2007 12:57 PM EDT
Fri, 8 Jun 2007 16:57:00 GMT

Dear Bottarelli Research Member,

It took a little dancing, but we were finally able to execute our sale prices on both the ATI July 110 Puts (ATI SX) and the CTRP June 75 Puts (QCT RO). Looking at ATI in particular, the stock has indeed moved as we expected after penetrating the 50-day moving average — and it could now be in the process of probing for a near-term bottom.

ATI

If you follow base-metals, then you’re well aware that they’ve gotten clobbered this week — which is clearly illustrated by this chart of the PHLX Gold and Silver Index (XAU).

XAU

If we witness a precious metals rebound next week, we could have a strong opportunity to play powerhouse Southern Copper (PCU – NYSE). As you can see, PCU is just about to test its 50-day moving average, so early next week we could have a great upside call buying opportunity, especially if the stock dips another $1.50 from current levels.

PCU

Along that same thinking process is Tesoro (TSO – NYSE). As you can see below, the stock has indeed touched its 50-day moving average and appears to have called this level near-term support. As I’ve mentioned earlier, TSO very rarely puts in three red candlestick days in a row, so we could find ourselves buying TSO calls early next week as well.

TSO

Looking at our open positions, the SPY August 150 Puts (SYH TT) continue to hand you remarkable gains. These puts have traded as high as $4.10 today, good for a 91% gain form your $2.15 entry price. Today’s SPY chart shows a possible support point is forming up, so let’s go ahead and sell HALF of our protective SPY puts now and lock in some gains.

SPY

PLAY: Sell HALF of your SPY August 150 Puts (SYH TT) at or above $3.70, good for the day. Hold the remaining half for more downside protection going into next week.

In terms of our two oil calls, your IMO July 45 Calls (IMO GI) are holding tough in the midst of a weak market, but your SII July 60 Calls (SIK GL) have traded lower over the last few days. I truly think that we’ll witness a strong rebound in oil stocks soon — perhaps as early as next week.

SII

Like I mentioned previously, I’ll continue to follow each of these positions, but if you adhered to the SII stop that’s probably a safe play in a volatile market. If we see the signs of an oil rebound early next week, we’ll have the opportunity to make some very nice trades, so stay tuned. Until then…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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