I Don’t Trust It
But Still, AAPL Calls Are a Good Play
Dear Bottarelli Research Member,
Call me a skeptic, but I’m not convinced that the worst selling pressure is behind us. For example, as you can clearly see on the chart below, the Dow could fact a major resistance ceiling at the 200-day moving average. If the Blue Chips fail at the 13,200 level, we could be in for another round of heavy selling pressure that could re-test the August lows underneath the 12,600 level. That’s another 500 points lower, and as you’ve seen last week, you can witness most of this loss over 1-2 days time.
As a result, I’m not going to get too hyped up about today’s opening-session pop. In fact, I’ve seen many similar moves reverse and trade lower by the end of the day, so we must continue to be as nimble as ever with our trading. Luckily for us, Mosaic (MOS – NYSE) has bee cooperative today. Despite the market’s big rally, shares of MOS are once again trading lower, pushing the MOS December 65 Puts (MOS XM) that we entered for $7.10 up to a high of $8.20, good for a 15% gainer. If the markets push lower as the day progresses, we could see more gains on this play, so let’s hold for more.
Now, despite my bearish skepticism, I am seeing some very strong moves in some of the top technology names (*Trading Note: In times like this, you only play calls on the best of the best). Having said that, just look at how Research In Motion (RIMM – NASDAQ) and Apple (AAPL – NASDAQ) have each defended their 50-day moving averages. Very strong!
With this type of support, I feel safe recommending a new December call play on AAPL. I certainly feel that Apple will have a blockbuster Christmas season, so it’s not a bad idea to have upside exposure in the world’s top technology company going into the third week of December. Let’s think of the recent fall from $190 to $160 as a gift and carefully add a new AAPL December call play to our ledger now!
PLAY: Buy the AAPL December 170 Calls (APV LN) at or under $8.90, good for the day. Current bid/ask spread is $8.40 to $8.50. Place a protective stop limit at $5.10.
Lock and load!
Sincerely,
© 2012 CSR Group, LLC. All rights reserved. Published in USA.
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