New Set-Ups

Play UA, Watch DKS, CROX, ITIR, MDR & DVN

By Bryan Bottarelli
Wednesday, September 12, 2007 12:01 PM EDT
Wed, 12 Sep 2007 16:01:00 GMT

Dear Bottarelli Research Member,

When collaborating with some of my trader buddies this morning, I was reminded of a common truth: “The market’s job is to make sure everyone is on the wrong side.” Nothing could be further from the truth. And because of this, I’ve set aside by bearish viewpoint and scanned for stocks exhibiting bullish tendencies.

Now don’t get me wrong. I want to maintain our CLF October 70 Puts (CLF VN) and our PSA October 75 Puts (PSA VO), as each position has done a wonderful job of maintain their values despite the market’s recent strength. But at the same time, I’d like to balance out the ledger with a new call play — and that leads us into a rash of new upside opportunities.

Looking at the retail sector, the strongest play (by far) has been Dick’s Sporting Goods (DKS – NYSE).As you can see, the stock has been blasting higher thanks to the best variety of the hottest sporting brands like CROCS (CROX – NASDAQ) and Under Armour (UA – NYSE), but I fear that the stock has gotten over-heated and could be due for a pullback. But an the other hand, the same cannot be said for two of DKS best selling names mentioned above.

DKS

Looking first at CROX, the stock once again looks poised to make a run at a new 52-week high above the $62.00 level. Considering the company’s brilliant move to brand their rubber shoes in NFL team colors, they’ve effectively turned their summer-only shoe into a year-round seller — which should continue to drive strong earnings all winter long.

CROX

On the same hand, UA also looks like it has established a support point right above its 50-day moving average — which signals further upside action leading into October. Since the company was launched using tight-fitting football clothes as their primary product, football season is where UA separates themselves from other retail plays like Nike or Addidas. This should fuel upward stock momentum in coming months.

UA

Also giving off bullish triggers is offshore oil and gas construction firm McDermott International (MDR – NYSE).The stock split 2 for 1 on September 10th, and has since continued to rally as more investors pile into the stock at a lower price point.

MDR

In the same space, oil and gas exploration and development firm Devon Energy (DVN – NYSE) is also breaking above its 50-day moving average, most likely sparked by oil’s run at $80.00 a barrel.

DVN

And not to be outdone, worldwide automated energy and water meter technology reader Itron (ITRI – NASDAQ) continues to gradually move higher despite all the market volatility. ITRI in particular looks like a prime candidate for a 6-month call play opportunity, but for the purposes of today’s trade, I’d like to go with Under Armour (UA – NYSE).

ITRI

The UA October 65 Calls (UA JM) are currently $0.70 out of the money, which means that offer a tremendous bang for your buck should UA rally above the $65 level. This move up past $65 would push these contracts into the money, offering you a higher appreciation multiple as UA continues to rally. In fat, I’m looking for a move back to $70.00 on this one, so let’s get positioned to profit off this move now:

PLAY: Buy the UA October 65 Calls (UA JM) at or under $4.00, good for the day. Current bid/ask spread is $3.80 to $3.90. Place a protective stop limit at $2.00.

Oh, and if you’re still holding calls on Garmin (GRMN – NASDAQ), the stock has once again moved higher and put your calls into the black. If you were unable to sell your calls and you’re currently showing a profit, I’d consider taking your gains on any further upside moves.

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

© 2012 CSR Group, LLC. All rights reserved. Published in USA.

Information, opinion, research, and commentary contained herein is obtained from sources believed to be reliable; their reliability, however, cannot be guaranteed. The maxim of Caveat Emptor applies — let the buyer beware. Bottarelli Research does not provide individual investment advice, act as an investment advisor, or individually advocate the purchase or sale of any security or investment.

Investments recommended in this service should be made only after consulting with your investment advisor, and only after reviewing the prospectus or financial statements of the company. Bottarelli Research reserves the right to use e-mail endorsements and/or profit claims from its subscribers for marketing purposes. All names will be kept anonymous and only subscriber’s initials will be used unless express written permission has been granted to the contrary.

CSR Group, LLC expressly forbids its writers from having a financial interest in any security recommended to readers. Furthermore, all employees and agents of CSR Group, LLC and its affiliate companies must wait 24 hours before following a published recommendation.

Bottarelli Research alerts contain time-sensitive information, and are published and distributed to members with urgency. Because of this, not all published materials can be adequately proofread, and an occasional spelling or grammar error may exist.


Other Options Alerts From September 2007