Addressing the Counter-Moves

Market Up, Leadership Groups Down

By Bryan Bottarelli
Thursday, May 29, 2008 12:19 PM EDT
Thu, 29 May 2008 16:19:00 GMT

Dear Bottarelli Research Member,

We’re seeing one of those days where the major market averages are trending up while the leadership groups over the last 3-4 months are trending down. Oil is back down to $128.00 a barrel, and this is applying pressure to the entire oil/energy sector.

As a result, 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) are all trading lower in today’s action. But as we’ve seen before, these counter-moves (where the leadership groups are down while the markets are up) prove to be temporary occurrences, so I’d like to remain in all these positions.

The most concerning of these positions is PTEN, especially after yesterday’s nice upside move. The stock is really trying to hammer out a near-term bottom, and if we can hang in there, I truly feel we’ll see new highs going into June.

PTEN

In terms of the major market averages, a look at the Dow chart below shows you that the Blue Chip average is flirting with the 50-day moving average as we speak. If we witness a failure at this level, we’ll be very glad we’re holding our protective put position in the SPY June 138 Puts (SFB RH).

INDU

So for now, let’s remain in our current positions. And until further notice,

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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