New Momentum Plays for 2008

Plus, A New Put on DECK

PLAY: Buy the DECK January 130 Puts (QUK MF) at or under 5.80, good for the day. Place a protective stop limit at $3.10.

Dear Bottarelli Research Member,

We’ve seen this story before. Over the past few trading sessions, the markets have opened sheepishly to the upside — only to give up these early gains and extend the string of losses that have began the 2008 trading campaign. Today’s Dow chart is no exception:

So, as I watch the markets make yet another feeble attempt to rally, I’d like to highlight one possible downside put play that has caught my eye. It comes in the form of Deckers Outdoor (DECK – NASDAQ).

Decker’s Outdoor produces outdoor activity footwear under the Teva and UGG brand names. As you can see from the chart, the stock trades for $130 per share and has just penetrated its support level at the 50-day moving average. If the stock cannot bounce back above their 50-day moving average, a downside move to the $110 level could be the next major move.

In fact, it doesn’t take long for these specialty footwear stocks to fall on hard times. Case in point, just look at the recent chart of CROCS (CROX – NASDAQ). Once a high-flyer at the $75.00 level, CROX has lost over 50% of its value in just over two months time. When I see a violent downside reaction like this, I can’t help but think that a similar fate could fall on DECK. Therefore, let’s go ahead and enter a very small put position in DECK right now.

PLAY: Buy the DECK January 130 Puts (QUK MF) at or under 5.80, good for the day. Place a protective stop limit at $3.10.

Over on the call side, we all know that some of the major momentum stocks that we successfully played in 2007 included names like Potash of Saskatchewan (POT – NYSE), DryShips, (DRYS – NASDAQ), Mosaic (MOS – NYSE), and Foster Wheeler (FWLT – NASDAQ), just to name a few. But thus far in 2008, these high-flyers of 2007 have been incredibly vulnerable to swift downside action. Therefore, I’ve conducted a mini-study of stock market activity in 2008, searching specifically for momentum stocks that we haven’t traded before (and are thus off the radar of your typical options trader) which have displayed remarkable strength despite the horrendous start to the 2008 investing year. The three stocks profiled below are among this group, and they could very well emerge as the POT or the DRYS of 2008. I’ll quickly profile each company:

Vimpel-Communications (VIP – NYSE): Similar to some of our other International plays on Millicom International Cellular (MICC – NASDAQ) and Petroleo Brasileiro (PBR – NYSE), VIP is an International telecom play displaying tremendous strength. They provide wireless telecommunications services in Russia, Kazakhstan, Ukraine, Uzbekistan, and Tajikistan — and the chart shows just how well they’ve been able to continue trading well above their 50-day moving average here in 2008.

FPL Group (FPL – NYSE): This one really impressed me. FPL Group engages in the transmission, distribution, and sale of electric energy to 4.4 million residential and commercial customers in Florida using natural gas, wind, nuclear, oil, and hydro power. That’s like an all-in-one power company — and as you can see from the chart — the stock has been brushing off the recent market weakness and moving aggressively higher. This is one I’d love to enter February calls on any pullbacks.

Varian Medical Systems (VAR – NYSE): Health and medical care stocks have began the 2008 year incredibly strong, and VAR is a global cancer therapy company that fits right into this category. They design and sell products to treat cancer with radiation, including linear accelerators, treatment simulation and verification products — and you can see that the chart has been very strong.

Going forward, I’ll be keeping a close eye on all three of these names (VIP, FPL, and VAR) for any immediate upside call buying opportunities. And also don’t forget about DECK for a put play as well. As always, you’ll be the first to know when it’s time to strike, but let’s continue to let this choppy market sort itself out before forcing any new trades.

Switching gears, I’d like to quickly highlight the recent success of our sister service, Bottarelli Research Small Caps. Although the 2008 investing year has gotten off to a rough start in the major market averages, some of our current small-cap holdings are really blasting off. In today’s trading, for example, ISIS Pharmaceuticals (ISIS – NASDAQ) is making a major move. The stock surged 49% in pre-market trading after Genzyme agreed to co-develop Isis’ cholesterol drug mipomersen in a deal that could be worth more than $1 billion to Isis. Mipomersen is in late-stage clinical trials as a treatment for familial hypercholesterolemia, an inherited disease that causes high levels of LDL, or “bad,” cholesterol. We originally entered ISIS on September 17^th for $13.94 per share and its’ currently up 44.55% in our small-cap portfolio.

Now, I mention this ISIS investment not to boast, but rather to highlight the fact that there are tremendous opportunities available to you in the small-cap sector — and as an active Bottarelli Research member, I want to ensure that you’re taking full advantage of these opportunities. So, if you are currently not an active member in our Bottarelli Research Small Caps service, I encourage you to get signed up for this service as well. After all, two of our biggest small-cap winners in 2007 were the 229% gain we took on Solarfun Power Holdings (SOLF – NASDAQ) and the 206% gain we took on JA Solar Holdings (JASO – NASDAQ).If you missed out on these returns, we just recommended another solar play that’s currently trading for only $18.00 per share — and we feel it’ll match the returns of JASO and SOLF in 2008. Not only that, but you can also take immediate advantage of two powerful China plays that nobody is talking about.

The first small-cap play is a stock that we call “The Goldman Sachs of China.” They’re the leading financial services firm in China, yet they’re off the radar of Wall Street. The second small-cap play is a stock that we call the “Century 21 of China.” Despite the housing bust here in the U.S. the Chinese real estate market is on the verge of a massive boom period — and this stock is the one and only way to invest in a China-based real estate brokerage. We expect big things for both of these stocks in 2008, and I urge you to add them to your small-cap ledger now. The complete details on these two China picks, plus our newest solar play, can all be found the moment you enroll in our small-cap service. So, if you’d like to join Bottarelli Research Small Caps now, simply submit the membership from below:

https://www.bottarelliresearch.com/subscribe/small-caps/offer/3V76XNW43Q/

Or, if you would like to like to learn more about Bottarelli Research Small Caps, then please take a moment to review all the exciting benefits of this service my following this link:

http://www.bottarelliresearch.com/small-caps/offer/3V76XNW43Q/

Whatever you decide, I want to ensure that you are receiving the most profitable investment research available, and adding our small-cap service to your investment arsenal accomplishes this goal. As always…

Lock and load!

Sincerely,