Pre-Market Alert: Ben’s Flip

Surprise Announcement Blasts Futures

By Bryan Bottarelli
Wednesday, December 12, 2007 9:20 AM EST
Wed, 12 Dec 2007 14:20:00 GMT

Dear Bottarelli Research Member,

It’s quite apparent that the Fed screwed up yesterday. So this morning, the Fed issued a statement that indicated the willingness to use other tools — such as the discount rate — to alleviate the banks’ unwillingness to lend even to each other. On this news, the Dow futures are up 250 points.

Now, make no mistake about it. If this announcement did not occur, the markets would have dropped another 1% to 2% this morning. But now that the Fed is back-peddling (after dropping the ball yesterday), we have a very manipulated market that is responding entirely on Fed moves. Therefore, I’d like everyone to close out the RIMM December 100 Puts (RUL XT) that I recommended at the close of trading yesterday. Sell them at market at the open. At the same time, remain long the CG January 90 Calls (CG AR). Once the dust settles, I’ll be out with further commentary. But until then…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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