A Dangerous Spot

Support at 12,000?

By Bryan Bottarelli
Thursday, June 19, 2008 10:32 AM EDT
Thu, 19 Jun 2008 14:32:00 GMT

Dear Bottarelli Research Member,

As you very well know, the markets have been choppy, volatile, and at times quite inexplicable for the entire month of June. As you can see from the Dow chart below, the Blue Chips have now lost over 1,000 points in one calendar month, as they moved from over 13,000 in mid-May to current levels underneath the 12,000 level here on June 19th. And I tell you what: If the major market averages cannot find some level of support here at 12,000, then we’ll see another big-time fall of at least 200-points. This would take us down to re-test the mid-March lows.

DIA

Without question, we’re at a very critical (and potentially dangerous) spot right now. And therefore, I’d like to adhere to our new tactical trading rules and refrain from making any new trades — at least for right now. After all, our recent strategy of coupling upside calls on strong market sectors (like oil and steel) with broad-based puts (on the DIA) has allowed us to take quick-hit gains in the midst of the volatility. So until we get further clarity, let’s maintain our COP July 100 Calls (COP GT) and our STLD July 40 Calls (RQL GH).If we need to add any additional puts, you’ll be the first to know. But until then, let’s sit tight and let the strength of these two plays pull each position into profitability. Until then…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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