Dow Breaks 13,000

Add WFT Calls

By Bryan Bottarelli
Monday, May 19, 2008 10:31 AM EDT
Mon, 19 May 2008 14:31:00 GMT

PLAY: Buy the WFT June 90 Calls (WFT FR) at or under $4.10, good for the day.

Dear Bottarelli Research Member,

Good morning. We’ve began the last full trading session in May with the Dow peeking its nose above the critical 200-day moving average (which also happens to be the significant 13,000 level). It’s been an amazingly resilient and impressive upside run for the bulls, especially given the obstacles facing them in the current market environment. But the charts don’t lie, and if the major market averages can hold above these current levels (and turn them into support from resistance), then we could have a lot more upside in our future.

INDU

Given this situation, I’d like to continue our tactical approach of carefully adding call options in the so-called “power sectors,” which are engineering, oil servers, and coal-related plays. These sectors (among others like the Dow Transports, dry bulk shipping, and agriculture/fertilizer) continue to give off strong upside indications. Therefore, whenever a strong trading opportunity within this group comes to light, we’ll quickly establish a new position. In fact, I think we have another such opportunity to add calls on oil server Weatherford International (WFT – NYSE) right now.

WFT

As you can see from the WFT chart, shares have been methodically been moving higher — and a recent consolidation period around the $85.00 level sparked an upside breakout to $90.00 last Friday. With shares coming back down a little today, I think this presents us with a really nice timing entry, as all indications show that WFT will break well past $90.00 in the coming days. Let’s profit off this upside move using WFT June calls. Here’s the play:

PLAY: Buy the WFT June 90 Calls (WFT FR) at or under $4.10, good for the day. Place a protective stop loss at $2.20 and a pre-determined sniper sell at $5.10.

At the same time, continue to hold your JOYG June 80 Calls (JQY FP) with a pre-determined sell order at $6.00. Similar to WFT, JOYG appears to be ready for another upside breakout, so maintain these calls for more gains.

JOYG

And as always…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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