Add UNP Calls

Plus: DRYS and WB

By Bryan Bottarelli
Thursday, August 14, 2008 10:39 AM EDT
Thu, 14 Aug 2008 14:39:00 GMT

PLAY: Buy the UNP September 75 Calls (UNP IO) at or under $5.70, good for the day. Place a protective stop limit at $3.20 and a sniper sell at $7.40.

Dear Bottarelli Research Member,

For the last three days, I’ve watched shares of Union Pacific (UNP – NYSE) vigorously defend its 50-day moving average. As you can clearly see below, the bears have attempted to push UNP below this level on three occasions — and all three attempts were used as a buying opportunity. Now that shares are bouncing above this level, I think UNP could have the momentum to push higher. Therefore, let’s add September calls now.

UNP

PLAY: Buy the UNP September 75 Calls (UNP IO) at or under $5.70, good for the day. Place a protective stop limit at $3.20 and a sniper sell at $7.40.

I’m also keeping a close eye on shares of Dryships (DRYS – NASDAQ). For over a month, the Baltic Dry Index has been selling off, which has pushed shares of dry bulk shippers like DRYS aggressively lower. But now, we could be seeing the beginning states of a recovery move. This same pattern helped us to score a strong winner with EXM, so I’ll continue riding this train as long as possible. Keep an eye on DRYS for a possible upside play. If shares break past the crossing of the 50 and the 200-day moving averages, we could be in for quite a ride.

DRYS

Also, let’s not lose sight of Wachovia (WB – NYSE). I still think this dog will have its day, and one look at the chart tells me that shares are hanging by a thread. One aggressive down-draft, and shares will get decimated, so be on the lookout for more WB puts coming soon.

WB

Until then…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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