Even More Set-Ups

Possible Trades on ZOLT, SSW, DRYS, BA & CRDN

By Bryan Bottarelli
Tuesday, July 24, 2007 2:38 PM EDT
Tue, 24 Jul 2007 18:38:00 GMT

Dear Bottarelli Research Member,

Yesterday the Dow was up 100 points. Today (as I write) the Dow is down 126 points. This choppy intra-day trading highlights the importance of holding positions on both calls and puts — and being nimble when it comes to timing our exit signals. As it stands right now, the current chart formation is leaning more towards the bearish side with the clear resistance level at 14,000, but that could all change by the end of the trading session. So while the battle continues to take place, let’s review our current positions and then highlight some additional opportunities that could trigger in the coming days.

INDU

First off, despite both stocks trading lower, the charts on both Titanium Metals (TIE – NYSE) and Agrium (AGU – NSE) continue to look bullish. TIE is making a strong case for holding support at the 50-day moving average, and if this level holds we’ll see upward price movement in the coming days. The TIE August 35 Calls (TIE HG) that we entered on July 19th for $1.85 are now trading for $1.25, so this position is currently down. But let’s give it a little more time and see if the 50-day MA holds as a support point.

TIE

AGU is also taking a breather today, but the down-tick still lies within the parameters of an up-trend. The AGU August 45 Calls (AGU HI) that we entered on July 19th for $4.10 currently trade for $2.55, so this position is also lower, but it’s not time to cut it loose just yet. Maintain your AGU calls for a coming upside turnaround.

AGU

In terms of today’s trades, CROX is holding up nicely in a down-market and MGM gives us exposure for further downside action. But when it comes to new opportunities, I’d like to highlight a few plays that we could be adding to our ledger soon.

The first possibility comes in the form of Zoltek (ZOLT – NASDAQ). The company manufactures and sells “winding and pultrusion” equipment that’s used for the wind turbines that you commonly see used for alternative wind energy. They also supply carbon fiber that deep-sea oil drillers use on their platform flotation systems — and according to the company — the demand for these products will exceed supply for the next two years. ZOLT could be a strong company that we use any momentary price dip to buy calls, so keep an eye out for this potential play.

ZOLT

Another “rocket-ship” upside play is DryShips (DRYS – NASDAQ). I mentioned the company on Friday July 13th when it was trading for $54.36, and since that note the stock has moved up to a high of $65.38. Needless to say, I missed a sizable move, but now it’s coming back down and we could have another entry opportunity.

DRYS

Along those same lines, a major competitor of DRYS is a company called Seaspan (SSW – NYSE). As you can see from the chart below, SSW has also moved up rather nicely, but not nearly at the same level as DRYS. This could open up an opportunity to add a longer-dated call play on SSW, so let’s be aware that this one is lying on the horizon as well.

SSW

Another stock to watch is Boeing (BA – NYSE). Tomorrow morning, the company is scheduled to announce their Q2 earnings, and the numbers look to be massive. The consensus estimate, for example, is $1.16 per share versus a loss of -$0.21 for Q2 2006. That’s a huge year-over-year turnaround for BA, and you better believe the stock will make a big move if Wall Street embraces the news. Of course, you could always witness a “sell on news” situation (note CRDN below) so let’s watch BA and play it cautiously.

BA

Another big mover today is Ceradyne (CRDN – NASDAQ). The ceramic-product maker reported Q2 profits rising 31% on earnings of $1.38 per share, but the stock is down rather noticeably today. This reaction could be overkill, so I’ll watch CRDN for an opportunity to turn a quick profit.

CRDN

The moment a new play arises you’ll be the first to know. But in the meantime,

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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