Closing Thoughts

Not Much Conviction

By Bryan Bottarelli
Monday, March 31, 2008 3:55 PM EDT
Mon, 31 Mar 2008 19:55:00 GMT

Dear Bottarelli Research Member,

I’ve been relatively quiet today — simply because I don’t have too much trading information to share. As you have probably noticed, the major market averages are trading higher today on the news that Treasury Secretary Henry Paulson proposed a blueprint to overhaul our nation’s financial regulatory structure. But since this plan will take anywhere between two & eight years for any of the important proposals to get implemented, I find it difficult to use this news as a basis for a bullish trigger.

Over on the bear side, you have major losses from Merck (MRK – NYSE) and Schering-Plough (SGP – NYSE) thanks to new data that shows that Vytorin is no more effective in treating heart disease than its less-costly generic alternatives. On this news, MRK and SGP are lower by 15.46% and 25.94% respectively. Ouch.

From an overall market perspective, you can see from the DIA chart that its clinging to its 50-day moving average. Its’ clear that the bulls trying everything in their power to call this a level of support — but since we’re holding puts on both the DIA and BNI, it’s obvious that we’re playing alongside the 4-month downtrend.

Since both contracts carry April expiration, we’ll have to begin formulating an exit strategy if our expected down-move doesn’t happen within the next few days. But until we have a clear understanding of where the market will go next, its’ wise to carry a reduced ledger and strike only when the indicators give off a dependable signal. Until then, let’s maintain our positions into tomorrow. And as always…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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