Pre-Market Alert: Fed Rescues Everyone

Short Selling Ban Pumps Market

By Bryan Bottarelli
Friday, September 19, 2008 9:27 AM EDT
Fri, 19 Sep 2008 13:27:00 GMT

Dear Bottarelli Research Member,

I’m sitting here in pure amazement as pre-market Dow futures indicate a move of +420 points on the open. If you listen to some of the top floor traders, you’ll see that most of this move is a direct result of Securities and Exchange Commission, who introduced a temporary ban on financial stock short-selling. If you manipulate the game, I suppose you can orchestrate any sort of directional move that you want, right?

The mainstream media will probably tell you that this upside move is due to the government’s plan to buy the bad assets from banks, or the Treasury Department’s plan to introduce an insurance program for money market funds. Those are two important factors, for sure. But let’s get real. When short selling is banned in a key market sector, that sector will soar. And that’s what we’re facing right at today’s open.

Of course, this will not bode well for our DXD October 70 Calls (DXD JR), which we entered yesterday at the close of trading. Therefore, this position will be stopped out right at the open of trading. But on a more positive note, we should be able to recapture these DXD losses wit the gains that’ll come from our KMB October 65 Calls (KMB JM) and our TSO October 20 Calls (TSO JD).Maintain both positions. Andas always, I’ll continue to offer you trading guidance throughout, what appears to be, another super-volatile (and exciting!) trading session. Until then…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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