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Allegheny Tech. - ATI - cls: 62.32 chg: +2.35 stop: 56.95

Company Description:
Allegheny Technologies Incorporated is one of the largest and most diversified specialty metals producers in the world with revenues of $4.0 billion during the most recent four quarters ending June 30, 2006. ATI has approximately 9,300 full-time employees worldwide who use innovative technologies to offer growing global markets a wide range of specialty metals solutions. (source: company press release or website)

Why We Like It:
We are increasing our exposure to the iron/steel/metals industry. Over the weekend we added CRS because we saw what looked like the beginning of a rally in the steel sector. That rally did continue on Tuesday and actually appeared to grow stronger. Shares of ATI produced a bullish breakout over multiple levels of resistance at the $60.00 mark, the 50-dma, and its two-month trendline of resistance (see chart). Chart readers will also note that volume has been improving on the two-day rally. Today's gain actually produced a new Point & Figure chart buy signal that is forecasting a $73 target. We are suggesting that readers buy calls right here but more patient traders might want wait for a possible dip back toward $61-60. Our target is the $67.50-70.00 range but we do expect some resistance near $65 and its 100-dma (64.85).

Suggested Options:
We are suggesting the October calls.

BUY CALL OCT 60.00 ATI-JL open interest=1381 current ask $5.40
BUY CALL OCT 65.00 ATI-JM open interest=2880 current ask $2.80

Picked on September 05 at $ 62.32
Change since picked: + 0.00
Earnings Date 10/25/06 (unconfirmed)
Average Daily Volume = 3.3 million
 

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