Not Going Down Without a Fight

Playing a Last Ditch Rally

By Bryan Bottarelli
Wednesday, May 23, 2007 4:14 PM EDT
Wed, 23 May 2007 20:14:00 GMT

Dear Bottarelli Research Member,

As the trading day comes to a close, let’s quickly review where we stand with our open positions.

Around mid-day, former Fed Chief Alan Greenspan triggered a sell-off after saying that Chinese stocks are due for a "dramatic contraction." But to be honest, this only sent minor-shock waves through the major market averages.

SPY

The S&P 500, for example, was only marginally weaker on the news — which illustrates that this raging bull will not go down without a fight. As you can see, the charts clearly illustrate that the SPY can make a big time down-move at any moment — and that’s why I’d like to add to our protective SPY June 150 Puts (SYH RT) before the end of the week. Currently trading for only $1.00 per contract, these puts represent an incredible value here at these high levels. Any sell-off could see them double or triple in a matter of days. I’ll most likely be out with this recommendation tomorrow.

At the same time, I’d like to use any final upside moves to close out our call positions. You see, I think the markets could make one final upside push before heading lower — so I may add to our ICE June 150 Calls (IHH FJ), LVS June 80 Calls (LVS FP), or DVN June 80 Calls (DVN FP) to participate in any last-ditch upside momentum.

ICE

After opening the session higher, ICE gave back some of yesterday’s gains — so we could use this slight dip to add to our calls and play any upside pop tomorrow. LVS also has a lot of room up move up — so it might make sense to add to that one as well.

LVS

And the same goes for DVN. For a $77 stock, the DVN June 80 Calls (DVN FP) are rather cheap for only $1.35 per contract, so the risk/reward of adding to this position at these levels is in your favor.

DVN

I’ll give you the full instructions as we begin trading tomorrow — but the game plan for now is to ride any last-ditch upside and get ready for the coming fall.

More to come tomorrow — but until then…

Lock and load

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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