Afternoon Update
Maintain AZO, V, and AEM
Dear Bottarelli Research Member,
Today’s intra-day reversal, which saw the Dow swing from a 70-point gain to a 140-point loss, supports my viewpoint that we’ll soon re-test the November 2008 lows at 7,500. As you know, the bears are a very patient group, and now that there’s evidence that the bulls have temporarily run out of momentum, it looks like we’ll witness selling pressure going into the end of the week. As a result, we have a Dow chart that is once again dipping underneath the 8,000 level. See below.
Because of this formation, I think we’re positioned perfectly with our three open positions. As I expected, shares of Visa (V – NYSE) are hitting resistance right at the 50-day moving average, and this should push the stock lower. As a result, maintain your V February 50 Puts (V NJ), and be sure to lock in profits at the $5.00 level.
At the same time, I also think that AutoZone (AZO – NYSE) is running out of gas as well. If the market remains under pressure, AZO could easily drop $10.00 or more. Therefore, maintain your AZO February 125 Puts (AZO NE), and be sure to lock in profits if they trade up to the $4.40 level.
And finally, I continue to love the idea of owning gold exposure. In a market like this, the chart of gold (and also the chart of gold stocks) represents one of the only pockets of strength. In particular, AEM looks on the verge of an upside breakout, so maintain your AEM March 60 Calls (AEM CL) for more upside. Be sure to lock in profits if they trade up to $5.30.
ADMINISTRATIVE NOTE: I will be traveling for business over the next two days, so there will be no additional trading alerts tomorrow or Friday. Based on today’s trading, I would like to stand pat with the three open positions listed above. Just be sure to lock in profits at our pre-determined levels. And the same goes for our protective stops.
We’ll talk again next Monday. Until then, have a good week. And as always…
Lock and load!
Sincerely,
© 2012 CSR Group, LLC. All rights reserved. Published in USA.
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