Add DRYS Calls

Strong Support at $70

By Bryan Bottarelli
Thursday, December 27, 2007 11:20 AM EST
Thu, 27 Dec 2007 16:20:00 GMT

*PLAY SUMMARY: Buy the DRYS January 75 Calls (DQR AO) at or under $6.90, good for the day. Current bid/ask spread is $6.20 to $6.60. Place a protective stop limit at $3.10.

Dear Bottarelli Research Member,

As I mentioned yesterday, shares of Apple (AAPL – NASDAQ) continue to rock and roll — and today’s upside move comes despite the fact that the major market averages are all moving lower.

AAPL

The S&P chart, for example, really needs to find support at the crossing of the 50-day and the 200-day moving averages. If not, then we could be in for yet another market fall. But despite this bearish threat, shares of Apple have established a new 52-week high at $202.96, and this move highlights an important trading tactic as we close out the 2007 calendar year.

SPX

You see, it looks like individual stock strength will now trump any broad-based market direction. in addition to Apple, for example, shares of Potash of Saskatchewan (POT – NYSE) continue to blast higher, and this should bode well for our calls on Bunge (BG – NYSE). Let’s continue to hold our BG January 120 Calls (BG AD).

Now, using this individual stock strength viewpoint as a trading metric, I’d like you to look at today’s chart of DryShips (DRYS — NASDAQ). As you know, I’ve been waiting for DRYS to fall down to the $70.00 level for quite some time — because this was a major support point. In fact, a bounce off the $70.00 level back in November sparked a rally up to $100.00, and it now looks like we could see a similar reaction leading into January.

DRYS

As you can see from the chart, DRYS is once again bouncing off the $70.00 level — and this comes on a day that the markets are very weak. Therefore, I’d like to use this support point as an opportunity to add the DRYS January 75 Calls (DRQ AO) to our ledger now.

PLAY: Buy the DRYS January 75 Calls (DQR AO) at or under $6.90, good for the day. Current bid/ask spread is $6.20 to $6.60. Place a protective stop limit at $3.10.

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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