Low Volume Friday

Position Update to Close Week

By Bryan Bottarelli
Friday, August 29, 2008 11:37 AM EDT
Fri, 29 Aug 2008 15:37:00 GMT

Dear Bottarelli Research Member,

As I mentioned yesterday, a low-volume trading day will close off the month of August 2008. But unlike yesterday, we’re seeing more of a standard market behavior, as an up-tick in oil prices has accordingly pushed the major market indices lower in today’s trading. As I write, the Dow has given back about half of yesterday’s upside gains — shown graphically below:

INDU

It’s important to note that today’s dip has not taken the Blue Chips back underneath the 50-day moving average. But also keep in mind, this result could be nothing more than low-volume trading. Therefore, I won’t place too much emphasis on this chart pattern until the trading floor is back to full capacity come next Tuesday.

So as it stands today, I won’t initiate any new trades today. But I will, however, offer a position update on our existing trades. Starting with BG, the stock chart continues to signal a forthcoming upside pop. $90.00 has been established as the floor, so maintain your BG September 90 Calls (BG IR).

BG

A similar situation is found in FCX. A bottom was set in early August, and FCX has spent the remainder of the month inching higher. Continuing inflation fears should spark bullishness in metals, and this could help FCX continue trending higher. Hold your FCX September 90 Calls (FCX IR) into next week.

FCX

It’s been a volatile ride for shares of MOS, but if you’re still holding the September 110 Calls (MOS IY) that we entered for $6.80, I will continue to follow the position. A breakout above the 50-day moving average could trigger a $10.00 upside move (if not more), so I’ll closely monitor the play for those of you still holding this position.

MOS

In terms of our two puts, I remain bearish on the financials. I’m hearing whispers that Lehman Brothers (LEH – NYSE) won’t survive the Holiday weekend, and this could be all it takes to re-ignite fears in the financial sector. Therefore, hold your WB September 15 Puts (WB UC) for a dip back under the 50-day moving average.

WB

And finally, a rather strong top at $57.00 could trigger another round of downside weakness in shares of ACI, so continue to hold your September 55 Puts (ACI UK).

ACI

Going into next week, we’ll be in better shape to achieve profits on these positions. And as always, I’ll tell you exactly when to make a move. But until then, have a relaxing 3-day weekend.

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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