Take DO Profits

Set Your Sniper Sell at $6.20

By Bryan Bottarelli
Wednesday, April 23, 2008 10:06 AM EDT
Wed, 23 Apr 2008 14:06:00 GMT

PLAY: Sell your DO May 135 Puts (DO QG) at or above $6.20, good for the day

Dear Bottarelli Research Member,

Good Wednesday morning. I’d like to begin today’s trading session with a discussion on Barrick Gold (ABX – NYSE). Now don’t get me wrong, I’m not intentionally zeroing in on this one particular stock. What I am doing, however, is playing a rather consistent chart formation whenever the opportunity for a quick gainer presents itself.

ABX

As you know, ABX has a pretty frequent habit of testing and bouncing off its 200-day moving average, and this has allowed us to make a series of winning trades along the way. Since the pattern seems to hold up fairly well, I’ll continue milking this cow for all it’s worth. As you can from the chart below, shares of ABX have once again approached its critical 200-day moving average. But this time, the stock is breaking below this level. ABX hasn’t done this in months, so I’ll watch to see if shares can bounce back above this level. If they can, it’ll once again be time to enter into ABX May 40 Calls. But until further notice, let’s wait to see how this technical formation plays out.

At the same time, continue to hold your MON May 130 Calls (MFP EF) and our NVDA June 20 Calls (UVA FD).And over on the put side, our DO May 135 Puts (DO QG) just broken into the black as well.

DO

If you recall, we entered these DO puts yesterday for $5.60 and they’ve traded as high as $6.10 today. As I’ve said before, I certainly love the oil service sector — which means to say I’m quite bullish on stocks like WFT, RIG, and DO over an extended time horizon. But from a pure chart perspective, it looks like DO is set to move lower, and that’s why I entered these puts. Now this is important: DO has an earnings announcement scheduled for tomorrow at 10:00 EST, and considering how earnings season has gone this year, it’s anyone’s guess how the Street will react to their numbers. Therefore, let’s lower our pre-determined sniper sell level to $6.20 just as a pre-cautionary move and try to lock in a quick gain in advance of this report. As I mentioned, your put prices have hit a high of $6.10 in today’s action, so we’re trying to lock in a little more profit throughout the session.

PLAY: Sell your DO May 135 Puts (DO QG) at or above $6.20, good for the day.

And as always…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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