Another Wave of Insecurity

Dow Opens 200 Lower

By Bryan Bottarelli
Thursday, August 09, 2007 9:51 AM EDT
Thu, 9 Aug 2007 13:51:00 GMT

Dear Bottarelli Research Member,

Another wave of credit insecurity has pushed the Dow down over 200 points at the open of today’s trading. This single down-move has completely wiped out yesterday’s 153-point rally and simultaneously pushed the Dow underneath its critical 50-day moving average. So once again, this critical level is being tested — and we need to keep a sharp eye on today’s action for clues for our directional bias.

INDU

What I’d like to do here is watch the action for the first hour — and see how things play out. Once the dust settles, we can get a better perspective on where we stand. After all, given the recent market volatility, I would not be surprised at all if we close the day higher.

I’d also like to maintain our balance of calls and puts by holding the X August 90 Puts (X TR) and the PCU September 110 Calls (PCU IB). I know that X has moved all over the map lately, but it’s critical that we maintain both upside and downside exposure in such a volatile market.

I’ll be out later today with further updates, but until then, we’ll watch this first hour of trading and see how the opening 200-point loss is absorbed. Then, we should have a better idea of our next round of plays. Until then…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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