Add AMZN Calls

Play An Upside Pop

By Bryan Bottarelli
Thursday, August 14, 2008 1:53 PM EDT
Thu, 14 Aug 2008 17:53:00 GMT

PLAY: Buy the AMZN September 90 Calls (ZQN IR) at or under $4.80, good for the day. Place a protective stop limit at $2.90 and a pre-determined sniper sell at $6.40.

Dear Bottarelli Research Member,

We find the major market averages at an interesting crossroad. Looking at the Dow, I can make a compelling argument for both the bullish and the bearish side of the coin. From a bearish perspective, the Blue Chips are about to once again fail at the 50-day moving average. But from a bullish perspective, the Blue Chips have consistently set a series of higher-lows since hitting their mid-June low, and a pop above the 50-day average could spark a continuation rally to at least 12,000. You can see this graphic set-up for yourself below:

INDU

As I study this situation, it’s becoming clear that money is flowing back into both the technology and the biotech sectors at a much more frequent and consistent pace. Although we successfully played a nice timing bounce in the oil/commodity sector yesterday, I haven’t seen this sector group extend their gains for more than two consecutive days. Therefore, I’d rather trade alongside plays that contain multi-session momentum, and this leads me to a new play on Amazon.com (AMZN – NASDAQ).

AMZN

As you can see from the chart, the online retailer appears poised to re-test its recent high above $90.00. And when I reviewed the September options string, I was quite amazed that the AMZN September 90 calls were trading for under $5.00. This looks like a bargain price for such a potentially explosive company, so let’s go ahead and add these upside momentum calls to our ledger now!

PLAY: Buy the AMZN September 90 Calls (ZQN IR) at or under $4.80, good for the day. Place a protective stop limit at $2.90 and a pre-determined sniper sell at $6.40.

And as always…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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