Take KSS Profits
Lock in Modest Gainer
PLAY: Sell your KSS January 40 Puts (KSS MH) at market, good for the day.
Dear Bottarelli Research Member,
For the last 14 trading days, I’ve felt that shares of Kohl’s (KSS – NYSE) have been on the verge of a breakdown. Perhaps it’ll come soon, but since we’re holding the KSS January 40 Puts (KSS MH), we have to be very wary of this Friday’s expiration. Therefore, with these puts now showing a modest 14% gainer, let’s go ahead and lock in these gains now.
PLAY: Sell your KSS January 40 Puts (KSS MH) at market, good for the day.
At the same time, a reversal in shares of BG has given our January 50 Puts (BGW MJ) a new lease on life. It still appears like a move down to the 50-day moving average is in order, so maintain these puts for more downside.
In terms of our two speculative call plays, I really wanted to hold our JASO calls leading into the January 20th inauguration. But as it turns out, the shares just cannot maintain any sort of upside momentum. As a result, our JASO February 5 Calls (QJP BA) have officially triggered our pre-determined stop at $0.30. As much as I’d like to hold this position, we must close it out.
Now, looking at the market moves from a “big-picture” perspective, the 2009 trading year is only nine days old, but the over-arching theme thus far is that nobody knows nothing. For example, the Dow has seen a 3-day upside move followed by a 3-day downside move — ultimately taking the Blue Chips slightly below where they began the year.
This trading pattern reeks of indecision, as investors burned by 2008 are still trying to devise a strategy to recover here in 2009. As a result, we have floods of cash on the sidelines carefully moving back into stocks, but at the same time these inflows are quickly liquidated the moment a short-term profit is achieved. That’s why, in my view, you’re seeing a pattern of 3-days of upside followed by 3-days of downside.
Throughout these choppy trading conditions, we have isolated some opportunities that contain sustainable upside growth. One such opportunity comes within the gold sector, which I plan to play using Barrick Gold (ABX – NYSE).
Another powerful opportunity comes in the form of Monsanto (MON – NYSE). Last Friday, MON blasted 10% higher after reporting Q1 profits that more than doubled. Based on this powerful report, they also increased their 2009 profit forecast. You can see this upside move in the chart from late last week. But in the days that followed, shares of MON have now given up all of those gains, which has taken MON back down to a very strong support level at the 50-day moving average. As I study this situation, it looks like now is a perfect time for anyone who didn’t get into MON last Friday to buy into it now.
They’re one of the only companies you’ll see in today’s market accelerating their growth numbers in 2009, and that should prove to be a strong upside catalyst for most of the year. Therefore, we may be adding calls very soon. Stay tuned for more details. And until then…
Lock and load!
Sincerely,
© 2012 CSR Group, LLC. All rights reserved. Published in USA.
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