Sleepy Expiration

Setting Up Next Week

By Bryan Bottarelli
Friday, July 18, 2008 2:54 PM EDT
Fri, 18 Jul 2008 18:54:00 GMT

Dear Bottarelli Research Member,

There really isn’t much for me to say today except for this…

“Yawn”

For most of the session, we haven’t experienced too much market movement — and I for one consider this a welcome change! Looking at today’s Dow chart, the bulls have down a really nice job of holding onto the gains from Wednesday and Thursday. Going into the close, I wouldn’t be surprised to see some selling pressure, as traders take profits off the table leading into the weekend. Therefore, I wouldn’t get too alarmed with any weakness at the close.

INDU

In terms of next week, we could see a pullback in the financial sector, as this collective group put in a major over-sold bounce this week (noted by the XLF chart below). If we witness any profit-taking next week, we could have another strong opportunity to play calls on the SDS. I’ll be watching this closely next week.

XLF

Another powerful play could come in the form of companies that’ll benefit from any commodity-based price correction. For example, a company like Archer-Daniels-Midland (ADM – NYSE), who has been weak due to high corn prices, or a company like Valero Energy (VLO — NYSE), who has been weak due to high oil prices — could each snap back aggressively if we see continued commodity-based price reductions. Both charts are listed below:

ADM

VLO

*NOTE: I will be issuing one of these “commodity-based correction” plays in my LEAPS service this week, so for all you LEAPS members, be on the lookout for this new trade tomorrow morning.

Aside from that, let’s continue to hold our PCU August 30 Calls (PCU HF) going into next week. I still consider the stock over-sold and due for a strong bounce.

PCU

So until next week, have a good weekend. And as always…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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