Position Update

ICE and CMI Stopped

By Bryan Bottarelli
Thursday, June 05, 2008 10:40 AM EDT
Thu, 5 Jun 2008 14:40:00 GMT

Dear Bottarelli Research Member,

As a quick follow-up to this morning’s email, we are seeing a nice bounce here in the early-going. As you can see below, the Dow is getting back to the levels where we opened on Tuesday, which is very similar to the bounce we witnessed in mid-April. If the markets can hold into these gains (which has been the problem going into the close over the last two days), then we should be in the right path for extended gains going into next week.

INDU

Unfortunately, this market bounce has not translated into gains in shares of Cummins Engine (CMI – NYSE). As you can see below, the stock continues to hug to the $70.00 level, which is quite baffling to me. Similar to a coiled spring, this chart indicates that CMI could blast off at any time, and an opening-session gain of +100 points should’ve been just what CMI needed to break out of this tight range. But that’s not the case, and therefore our CMI June 70 Calls (CDM FN) has triggered a stop at $2.10. This position is now closed.

CMI

The same fate has occurred in shares of Intercontinental Exchange (ICE – NYSE) as well. Unlike CMI, shares of ICE are responding to today’s market upside, as you can see from the up-tick in today’s chart below. This move offers us no choice but to adhere to the $2.10 protective stop on the ICE June 125 Puts (ICE RU). This position is closed as well.

ICE

This leaves us holding the DE June 80 Calls (DE FP) and the PTEN June 35 Calls (NZQ FG), and hopefully each position will respond accordingly to today’s bullish market internals. I also mentioned Goldman Sachs (GS – NYSE) in this morning’s alert, and here is how the GS chart is looking this morning:

GS

If shares can break above the 50-day moving average at $180.00, then we could see a move back up to $200.00 in short order. Therefore, I’ll continue to watch this one for an immediate trading opportunity. Until then…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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