May 2nd All Over Again?

Trading Patterns Repeating

By Bryan Bottarelli
Tuesday, May 20, 2008 10:32 AM EDT
Tue, 20 May 2008 14:32:00 GMT

Dear Bottarelli Research Member,

We’ve got a very interesting chart formation on the Dow today. As you can see below, the first trading day of May (which was May 2nd) saw the Dow dip its head above both the 200-day moving average and the 13,000 level — only to fail to at this level and fall 200 points (from 13,000 to 12,800) before finding support.

INDU

Eighteen calendar days later takes us to today’s trading session — and low and behold — we’re seeing the exact same pattern. The Dow once again has peeked above the 200-day moving average at the 13,000 level — and once again this level has failed to hold. But even considering this failure, the Blue Chips are still within the parameters of the upside trend that started in mid-March. Therefore, I’m going to base my trading bias on the strongest prevailing trend, and that’s to the upside. In fact, the 12,800 level is where the Dow found support earlier this month. And as I write, that level is now only 75 points away.

If we approach this level, I will take a shot at establishing a new upside call play. But let’s monitor the action over the next hour just to make sure that our trading thesis is correct. So until further notice, maintain your WFT June 90 Calls (WFT FR) with your pre-determined sniper sell. And as always…

Lock and load

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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