Another Commodity Sell-Off

Oil Dips to $116, Can it Last?

By Bryan Bottarelli
Friday, August 08, 2008 9:55 AM EDT
Fri, 8 Aug 2008 13:55:00 GMT

Dear Bottarelli Research Member,

We’ve opened 08/08/08 with yet another sell-off in the oil and commodity-based names, which has triggered a stop on our APA August 115 Calls (APA HC). These calls actually hit our stop late in yesterday’s session, reversing the profits that we had just after entering the play. Snap-back reversals like this do nothing but support the idea that we must continue locking in profits as quickly as possible. In this market environment, we really have no other choice.

In terms of directional moves, I fear that the Dow’s failure at the 50-day moving average (which also coincides with a double-top formation under 11,750) indicates that we could be in for more selling pressure. Take a look:

INDU

As a result, I’d like to remain positioned in our WB August 19 Puts (WB TV) and our LAMR August 35 Puts (LJQ TG). Both charts indicate further downside action, so maintain each of these puts for further gains.

In terms of new plays, we could have a quick opportunity to play calls on Potash of Saskatchewan (POT – NYSE) if the stock can establish a support level at the 200-day moving average at $170.00. But until I receive a strong indication that this support level has been set, the plan is to watch carefully from the sidelines.

POT

So until further notice, maintain your two puts. And as always…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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