Addressing the Counter-Moves, Part II

SPY Puts Stopped

By Bryan Bottarelli
Thursday, May 29, 2008 3:21 PM EDT
Thu, 29 May 2008 19:21:00 GMT

Dear Bottarelli Research Member,

I’m not going to lie. Tomorrow marks the last trading day of May 2008, and I’ll be glad to flip the calendar over to June.

After all, we’ve seen an abnormal number of “odd” trading sessions this month, where the major market averages are up while everything on my screen is red. And vice versa.

I’m not the only one noticing these odd trading patterns. Many of the technicians and traders I talk to are receiving conflicting market signals every other day (if not every other hour!) and this just proves that the markets remain undecided about where to move next.

To be completely honest with you, I was concerned about the markets trading south today, and that’s why I issued the SPY June 138 Puts (SFB RH).But as it turns out, the markets have rallied today, and this upside move triggered our SPY stop loss. Therefore, our position of temporary downside protection is now closed. Should I sense the need to re-establish a protective downside position, I’ll re-enter a new put play in a forthcoming alert.

SPY

Despite this market upside, our call positions have been unable to particulate all day long, as our PBR June 70 Calls (PMJ FN), CMI June 70 Calls (CDM FN), DE June 80 Calls (DE FP), and PTEN June 35 Calls (NZQ FG) continue trading lower in today’s action. To be honest, these are not the only stocks trading lower today. Virtually everything on my screen is red today, which makes me wonder where the market strength is coming from. But like I mentioned this morning, leadership groups don’t fade away. Therefore, I’m still comfortable holding upside plays on oil, energy, and heavy machinery (via farming and engines). Let’s maintain all of these positions leading into tomorrow — and we’ll see if the markets can sort themselves out. Until then…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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