Mid-April Support in Sight

Plus: Your New Charter Membership Opportunity

By Bryan Bottarelli
Wednesday, June 04, 2008 10:09 AM EDT
Wed, 4 Jun 2008 14:09:00 GMT

Dear Bottarelli Research Member,

The major market averages remain weak this morning, as the S&P 500 has now dipped underneath the critical support level at the 50-day moving average. As you can see from the SPX chart below, a similar technical move on the SPX occurred in mid-April, and this gave birth to a 100-point rally over the course of the following calendar month. Notice how the SPX dipped under the 50-day moving average at 1,325, put in a strong recovery, and then moved all the way up to 1,425 by mid-May.

SPX

At the same time, we have a Dow chart that’s also showing a similar pattern. Although the Blue Chip chart is much weaker than the SPX chart (illustrated by the fact that the Dow has been underneath its 50-day moving average for the last 9 trading days), a close look below shows you that the Dow is also coming upon the same support level from mid-April as well. As you can see, a dip underneath the 12,400 level in mid-April sparked a 600-point rally that took the Blue Chips above 13,000.

INDU

In other words, I’m trying to illustrate the point that the major market averages (despite their recent weakness) are now approaching levels that sparked major upside moves. And to participate in these potential upside move, I’m trying to maintain a ledger of call options that will hand us the best possible return once it occurs. This ledger includes the DE June 80 Calls (DE FP), CMI June 70 Calls (CDM FN), and PTEN June 35 Calls (NZQ FG).As much as I’d love to continue holding the PBR June 70 Calls (PMJ FN), this position traded for $1.40 this morning, and this triggered our pre-determined stop loss. The recent movements of PBR have rather annoyed me, as I know that the stock is much stronger than how it’s been trading lately. In fact, the moment PBR can regain its footing, I feel we’ll see an explosive move to the upside, so keep an eye on PBR. I may jump right back into an upside call play on any signs of support.

PBR

Also, in terms of downside protection, we’re also holding the ICE June 125 Puts (ICE RU).As you can see from the chart below, ICE realty doesn’t have anything that’ll stop it from dropping another $10.00, so maintain these puts for more downside action.

ICE

And on that note, let’s get into some rather exciting news….

THE CAT IS OUT OF THE BAG!

Last week, I vaguely told you about an exciting new opportunity — and I simply cannot hold my tongue any longer. So here it is: Today, I will be launching a brand new service called Bottarelli Research LEAPS!

Within the next hour, you’ll receive the full details on this new “Charter Membership” opportunity, so be on the lookout for this important information.

As a side note, today’s launch will go out to 1,000 active Bottarelli Research Options member and 500 active Bottarelli Research Small Cap members. Add it up, and that’s 1,500 active members total. But since there are only 1,000 available Charter Memberships to Bottarelli Research LEAPS, some Bottarelli Research members will not be able to join this new service. Therefore, if you have any interest in learning about this exciting new opportunity, be sure to open your forthcoming email (titled “Your Private Charter Member Invitation”) immediately. I won’t get into any more details right now, but when you see the profit-exploding potential of Bottarelli Research LEAPS, I know you’ll be blown away. Full details are coming in less than one hour.

Until then…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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