Two Friday-Afternoon Plays

Add Calls on STLD and SPWR

By Bryan Bottarelli
Friday, April 04, 2008 1:04 PM EDT
Fri, 4 Apr 2008 17:04:00 GMT

PLAY: Buy the STLD May 35 Calls (RQL EG) at or under $3.60, good for the day..

PLAY: Buy the SPWR May 100 Calls (QSU ET) at or under $5.00, good for the day.

Dear Bottarelli Research Member,

Today’s trading action marks the second time where “bad news” is used as a rallying point. The first instance came when UBS reported $15 billion in new write-downs, and the financial sector put in a strong rally. The second instance comes today, where the markets are bouncing higher after unemployment jumped 5.1%.

When I see this type of reaction, the market mentality is clearly saying that “the worst is behind us.” And if that’s the case, I’d like to enter into two new upside calls positions going into May. The first play is a continuation play based on a new 52-week high in the steel sector. The second play is a powerful solar stock that’s just now breaking above its key 200-day moving average. If we get any additional market upside early next week, both plays could pay off handsomely, so let’s get right into it!

Based on the movements of the agricultural stocks today, its’ quite apparent that the broad-based commodity sell-off that we experienced just a few short weeks ago is bouncing back full throttle. Therefore, I’d like to get positioned to ride further upside gains in shares of Steel Dynamics (STLD – NASDAQ).

STLD

As you can see, the U.S. maker of hot rolled, cold rolled, and coated steel products is setting a series of new 52-week highs, and I’d like to ride this upside momentum for all that we can. Therefore, let’s get positioned in May calls now!

PLAY: Buy the STLD May 35 Calls (RQL EG) at or under $3.60, good for the day. Place a sniper sell order at $4.20 and a protective stop limit at $1.90.

The second upside call play comes courtesy of SunPower (SPWR – NASDAQ). As you know from our recent 60% winner on SOLF, solar stocks are once again on fire. And now it’s time to play a 200-day moving average breakout on SPWR.

SPWR

A subsidiary of Cypress Semiconductor Corporation, SPWR sells solar cells, solar panels, and solar inverters, and you can see that the stock is attempting to break up past its 200-day moving avenge. If the stock succeeds, we could have some rather powerful upside in the making, so let’s get positioned to ride this momentum using May calls as well.

PLAY: Buy the SPWR May 100 Calls (QSU ET) at or under $5.00, good for the day. Place a protective stop limit at $2.30, but do not place any sniper sell orders at this time. When it’s time to sell, I’ll alert you via an intraday sell alert.

And as always…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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