Play MOS Puts
Plus, Maintain ICE Sell
Dear Bottarelli Research Member,
You probably don’t realize this, but last week, stocks suffered their biggest three-day decline in five years. The NASDAQ experienced its biggest weekly drop since September of 2001, and the Dow (as noted below) has broken underneath its 200-day moving average. This is really not a good thing for the bulls.
In fact, a prominent S&P floor trader told me last week that on the days that the market was higher, most of the trading action from the big institutions involved selling into these rallies. This is important because for most of the 2007 calendar year, this same institutional money was buying into the rallies — not selling. This positional shift could be an early signal that the major money managers are using any last market upside to lock in their returns for the 2007 calendar year, and that explains why qualify stocks like Apple (AAPL – NASDAQ), DryShips (DRYS – NASDAQ), Potash of Saskatchewan (POT – NYSE), Southern Copper (PCU – NYSE), Fluor Corporation (FLR — NYSE), and many, many other making such violent downside moves. In fact, even with the market rallying today, most of these high-flyers (especially on the materials side) are still getting clobbered, and that’s why I’d like to carefully add a new put position on Mosaic (MOS – NYSE).
As you can see, the worldwide crop nutrient, animal feed, and fertilizer maker has been engaged in a very strong upside run, but today that trend has violently reversed to the downside. The large red candlestick formation tells me that MOS longs are now running for cover, and MOS should soon be re-testing its 50-day moving average. That’s means we could see another $10.00 of downside action in short order, so let’s profit off this moving by adding the MOS December 65 Puts (MOS XM) to our ledger now!
PLAY: Buy the MOS December 65 Puts (MOS XM) at or under $7.10, good for the day. Current bid/ask spread is $6.70 to $6.90. Place a protective stop limit at $3.40.
Also, if you missed the sell price on the ICE November 170 Puts (IHH WN), continue to work this order good for the day. As I noted above, the smart money is selling into any rallies, which could very well lead to a downside market by the end of the day.
Lock and load!
Sincerely,
© 2012 CSR Group, LLC. All rights reserved. Published in USA.
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