Two New Plays

Add CMG and MA Calls

By Bryan Bottarelli
Thursday, July 12, 2007 11:44 AM EDT
Thu, 12 Jul 2007 15:44:00 GMT

Dear Bottarelli Research Member,

Over the last week, we’ve had an ongoing discussion of the current Dow chart. As a quick refresher, we have a technical battle taking place that shows a double-bottom formation going up against a possible triple-top formation.

INDU

As you can see by today’s Dow chart, the 148-point sell-off on Tuesday (sparked by Mr. Bernanke) has now been completely recovered — which signals that we have more upside to come. If we can break through this triple top, then it’s off to the races. So let’s get positioned in two new upside call plays that are each showing near-term support tendencies. If either stock breaks out, you would be looking at some serious gains — so let’s get right into it!

The first stock candidate comes in the form of Chipotle Mexican Grill (CMG – NYSE). The popular fast-casual Mexican restaurant now has over 581 locations in the U.S. and this number is growing by the day. As you can see by the chart, the stock is using the 50-day moving average as a strong support point — and all indications show that CMG will be breaking out to a new high very soon. Let’s ride this momentum using August calls.

CMG

PLAY: Buy the CMG August 90 Calls (CMG HR) at or under $3.60, good for the day. Current bid/ask spread is $3.40 to $3.50. Place a protective stop limit at $2.00.

The second stock candidate comes in the form of Mastercard (MA – NYSE). Serving over 25,000 financial institutions worldwide, MA has been one of the most explosive winners this year. And similar to our ICE play yesterday, the stock can make very fast upside moves. The chart below shows the MA action as of yesterday — but what you won’t see is today’s strong upside tick that signals that the temporary weakness is over. As a more speculative trade (with a bigger reward) let’s also add August calls on MA as well.

MA

PLAY: Buy the MA August 170 Calls (MAL HN) at or under $7.40, good for the day. Current bid/ask spread is $6.90 to $7.30. Place a protective stop limit at $4.10.

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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