DXD Closed

DRYS Blasting Off!

By Bryan Bottarelli
Wednesday, December 10, 2008 9:59 AM EST
Wed, 10 Dec 2008 14:59:00 GMT

Dear Bottarelli Research Member,

As much as I hate to do it, the major market averages are giving us no choice but to officially close out our DXD December 80 Calls (DZS LB).

DXD

As you know, we’ve been using the market’s recent upswing push to add to this ultra-short position, which would allow us to profit off any strong downside move. And I’ve been stubbornly holding them, awaiting such a move. Yesterday when the Dow hit its head on the 50-day moving average and failed, that should have been the trigger point that pushed the Blue Chips aggressively lower. But this morning, the markets are trading higher once again — despite more bad economic news.

INDU

Further complicating the issue was the fact that our DXD calls failed to move up on yesterday’s -200 point drop, which indices that the floor traders are now playing games with these contracts.

I want to be clear on this: Since the Dow has yet to break past its 50-day moving average, I’m still bearish on the near-term directional move. But considering where we now stand with our DXD calls, the down-move that we’ve been expecting has yet to materialize. And with less than two weeks until expiration, we’re now seeing the floor traders restrict the movement of these calls. Add up both of these elements, and we are left with no choice but to close out this position now. Do I want to do this? Heck no. But we’ve officially hit our stop, so this position must be closed off.

Now don’t get me wrong: If the major market averages begin their downside move, I’ll certainly jump back into a 2x short position going out until January. And if the averages break through their 50-day moving average, we’ll play the appropriate upside plays as well. But until this stalemate gets resolved, it’s best to wait patiently on the sidelines.

In some better news, our Dryships (DRYS – NASDAQ) recommendation (contained in your newest special report, The 5 Best Stocks Under $5.00) continues to blast aggressively higher. In my commentary, I predicted that all of these plays could gain 50% to 100% in 3 months time, but DRYS has gone from $4.00 all the way up to $11.85, good for a whopping 196% gain in less than two weeks! If you haven’t already done so, lock in these stunning profits now!

DRYS

And not to be outdone, AK Steel (AKS – NYSE) is quickly getting close to a double as well, so if you’re holding this one as well, be sure to lock in profits at the 100% level!

AKS

As always, I’ll be out with further updates as the day progresses. But until then…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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