HHH Triggers on Late-Session Drop

Tepid "Rally" Quickly Turns South

By Bryan Bottarelli
Thursday, May 18, 2006 4:17 PM EST
Thu, 18 May 2006 21:17:00 GMT

Dear Bottarelli Research Member,

Three quick things to wrap on today’s trading….

First off, your HHH June 55 Puts (HHH RK) triggered at our $4.20 sell price shortly after 2:38 central time. That’s when the HHH index set a new 52-week low at $50.84, giving us a quick winner on this downside internet play.

Secondly, the markets continue be dangerous — without offering any sort of safe haven. This is evident as the metal stocks got hammered — again.

  • Titanium Metals (TIE – NYSE) has gone from a 5/11 high of $47.62 to a low of $30.56 today. That’s a loss of $17.06 in seven calendar days.
  • Southern Copper (PCU — NYSE) has gone from a 5/11 high of $109.63 to a low of $86.33 today. That’s a loss of $23.30 in seven calendar days.
  • Freeport-McMoRan Copper & Gold (FCX – NYSE) has gone from a 5/11 high of $71.80 down to $54.77 today. That’s a loss of $17.03 in seven calendar days.

Even one of my favorite big-caps, Caterpillar (CAT – NYSE), has now posted eight (8) straight trading days of red candlesticks. You certainly won’t find that sort of consecutive downside action in their 2006 chart. In fact, I went all the way back to 2004 and couldn’t find a single time where the stock had eight straight red candlestick days!

CAT

And third, with today’s closing, which witnessed a dramatic end of day sell-off after literally hours of tepid activity, it’s pretty apparent the bears are not going away until possibly next week.

In fact, as we head into Friday, the capping day on this brutal week, I wouldn’t be surprised to see even more downside action. But the important thing is for us to stay nimble — and stay focused. As I illustrated above, some of the very best stocks are getting absolutely hammered, and it’s getting to a point of overkill. We want to be buyers when everyone else is selling. Or at least, we want to be pretty darn close — and I’d think that time is coming soon. Until then…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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