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In this Article:
Goldman Sachs raised their price target for our “old school tech play” from $50 to $53.
A ruling on litigation between QCOM and Broadcom (BRCM:Nasdaq) looks to move QCOM to our intermediate target of $48.
Out next Tech pick is perfectly timed, as the buy signal only hit in the last 72 hours (a neat trick in a market this high).

Trading Tactics: The Sector Rotation to Tech Continues

Bryan's already covering energy today, freeing me to look at other stories (whew!). Let's start with Hewlett Packard (HPQ:NYSE). A few days back, Goldman Sachs raised their price target for our “old school tech play” from $50 to $53.

If we see half of that before the play retires, your max gains will rise from 83% to over 200%.

Meanwhile, another of our “Post-Oil” tech picks, Qualcomm (QCOM:NASDAQ), is looking to rack up yet another 52-week high. As I sit to write (admittedly more than a few moments before the close), QCOM is still some 18 cents shy of that goal.

The WOW calls Bryan selected for you, however, hit $6.25 today, for a max gain of better than 30%, a fairly good showing for eight trading days. Forbes reports that on May 25, we may see a ruling involving litigation between QCOM and Broadcom (BRCM:NASDAQ) with reasonable potential to move QCOM toward our intermediate target of $48. With a delta of .79, this would push your calls to $7.78 for a max gain of 62% in short order.

With this in mind, Bryan and I went back to the well and will have one more tech pick for you in tomorrow's issue of WOW. Best yet, this one is perfectly timed, as the buy signal only hit in the last 72 hours (a neat trick in a market this high.)

Adam

Gas Prices: Another New Record

As we kick off the last full trading week in May, we've witnessed yet another new record for retail gasoline prices.

According to AAA, one gallon of regular unleaded gasoline costs an average of $3.196. That's up from the previous record of $3.178 from Sunday -- and up $0.337 from just one month ago.

At the same time, crude oil futures jumped above $66 per barrel -- as concerns have once again surfaced that U.S. refiners are not producing enough gasoline to meet the upcoming summer demand.

Don't forget, Memorial Day weekend (which is exactly one week from today) officially kicks off peak driving season, and the U.S. Energy Information Administration reports that gasoline inventories are well below the average for this time of year. That's why many experts are calling for volatile trading in the oil and gasoline sector over the next few weeks.

Adding to the price instability is the inauguration of a new president in Nigeria. This could spark violence and push prices higher. And if that isn't enough, the June crude contract on the Nymex also expires this week, which could further add to pricing volatility.

With a handful of catalysts that could push oil prices higher, Adam and I issued an upside call play on El Paso (EP:NYSE). According to WaveStrength charting, El Paso represented the cheapest way to gain upside exposure to the oil sector -- and so far that forecast is right on the money.

Headquartered in Houston, El Paso operates 43,000 miles of interstate pipeline and holds 2.4 trillion cubic feet of natural gas equivalent of proved natural gas and oil reserves. The call options that we entered last week are already showing a maximum gain of 45%, and the upside run looks far from over. For all you WOW members, maintain your EP calls for more gains!

Bryan

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Adam Lass is the founder and manager of the WaveStrength Group, and is a contributing editor for Taipan Financial News. As the creator of WaveStrength's proprietary analysis system, Adam's expertise has shaped a franchise of successful investment newsletters and services, including WaveStrength Options Weekly and WaveStrength Apex.

Bryan Bottarelli is the head trading tactician for the WaveStrength Group, and is a contributing editor for Taipan Financial News. Coming off the floor of the Chicago Board Options Exchange (CBOE), Bryan uses WaveStrength chart forecasting to develop wining options plays for his service called WaveStrength Options Weekly. Bryan is also the lead editor of BottarelliResearch, an elite membership service that he independently publishes himself.

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Related Articles
Analysis: GS on HPQ.
Options: Forbes on QCOM.
Oil Prices: Gas at a new record high.

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