Dow, Nasdaq at 200-Day MA

Call it Support? Call it Resistance?

By Bryan Bottarelli
Wednesday, December 19, 2007 11:05 AM EST
Wed, 19 Dec 2007 16:05:00 GMT

Dear Bottarelli Research Member,

It’s already Wednesday December 19th, and the major market averages have done nothing yet to spark their classic “End of Year” rally. Today’s Dow chart, for instance, is making a rather weak attempt to penetrate the 200-day moving average (noted in red). If the Dow fails to break through this level, I’m afraid we could see more selling pressure.

INDU

A similar pattern is found on the NASDAQ. Given the year-long strength of stocks like Google, Apple, Research in Motion, Amazon, and Garmin, you would expect to see the NASDAQ assume a leadership position here in December. But just like the Dow’s chart, the NASDAQ is trying to decide whether to call its 200-day moving average support or resistance.

COMPQ

These critical technical levels can typically lead to volatile trading, and that’s why I’d like to continue holding our GRMN January 90 Puts (GQR MA). The stock is trading up toady, as you can see from the chart below, but the reason I played puts is because GRMN has an un-filled gap right around the $88.00 level. Yesterday’s massive red candlestick formation could be an early clue that GRMN is headed back to fill this gap. Not only that, but tech leaders like Apple and Research in Motion are not even up over $1.00 in today’s trading, so it appears like technology is losing some momentum. Therefore, let’s continue to hold our GRMN puts.

GRMN

Over on the call side, let’s also maintain our BG January 120 Calls (BG AD) and our PBR January 115 Calls (PMJ AZ).I remain comfortable owning upside exposure in the agricultural sector via BG and Brazilian oil via PBR into January. And in terms of new trading opportunities, nothing yet today has triggered a strong opportunity, so I’m not going to force it. Should something pop up, we’ll definitely trade it, but so far in today’s session we’re only seeing lukewarm signals. I’ll continue to keep watch.

In the meantime, if you have yet to take our special end of year renewal offer, the time to act is now. Since this special offer expires on December 24th, that means you only have three trading days left! So if you haven’t already done so, take a moment and lock in these discounted rates before the prices increase in 2008! For all the details (plus a surprising little confession and a tax-loophole nugget from yours truly) see the section below:

*YEAR END SPECIAL REMINDER: I have a confession to make. Maybe it’s just me, but one of my favorite things about the holidays is seeing the year-end car commercials. It must be an example of marketing at its finest, because I honestly enjoy watching them. I suppose there’s just something special about a Lexus or a Mercedes Benz with a big red bow on top (mixed with falling snow and seductive music) that makes me want to go out and buy a car. It just makes me feel good. So, to emulate this special feeling, I’ve put together a special 9-month membership extension for the lowest prices of the year. And if you have yet to take advantage of this discount, your time is quickly running out. You see, this offer is only good until Monday, December 24th. That’s only 3 trading days from today! And after that, our membership prices will be increasing. So if you have yet to take this special membership renewal, please act now.

AS AN ADDED INCENTIVE, CONSIDER THIS: If you sign up on this side of the 2007 calendar year, you can write off this membership fee on your 2007 taxes! It’s a textbook “research expense,” which means you can basically extend your membership for 9 months and then write it off dollar for dollar. It’s a great deal, so if you haven’t already done so, be sure to follow the discounted membership link below and select the 9-month term titled “Year End Special” before it expires next Monday!

https://www.bottarelliresearch.com/renew/?service=opt&offer=E0R2663KRR

Above all, I’m looking forward to a fantastic 2008 trading year, and I want you with me every step of the way. So be sure to take advantage of this special offer and secure your membership now! And as always,

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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