Add CLF Calls

Playing a 50-Day Breakout

By Bryan Bottarelli
Monday, December 08, 2008 10:30 AM EST
Mon, 8 Dec 2008 15:30:00 GMT

PLAY: Buy the CLF January 22.5 Calls (CLF AS) at or under $4.60, good for the day. Place a protective stop limit at $2.10 and a pre-determined sniper sell at $7.00.

Dear Bottarelli Research Member,

Obama’s massive infrastructure proposal has sparked a strong upside move today in names like Fluor Corporation (FLR – NYSE), Foster Wheeler (FWLT – NYSE), and Jacobs Engineering Group (JEC — NYSE). As you can see from the FLR chart below, this powerful upside move is helping these names pop aggressively above their 50-day moving averages, which is a strong signal for continued upside.

FLR

If this technical pattern takes hold, then we could see a similar upside move in shares of Cliffs Natural Resources (CLF – NYSE). You see, CLF produces iron ore pellets and supplies metallurgical coal to the steelmaking industry primarily in North America. And if the infrastructure plans go forward, you can’t get steel without CLF’s iron-ore. Therefore, CLF is one of the top companies poised to benefit off this trend — yet the stock has not yet blasted past its 50-day moving average like their counterparts listed above. In my view, this sets the table for a powerful opportunity.

CLF

While everyone remains focused on FLR, FWLT, and JEC, I’d like to get positioned to ride a continued upside move in CLF. To give us some additional time, I’ll play January calls. In fact, CLF looks like a wonderful play for both the near-term and the longer-term, which is why I’m considering adding CLF calls in my LEAPS service this week. But for today, let’s to ahead and add CLF January calls now!

PLAY: Buy the CLF January 22.5 Calls (CLF AS) at or under $4.60, good for the day. Place a protective stop limit at $2.10 and a pre-determined sniper sell at $7.00.

And as always…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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