Add QID Calls
Nasdaq Still Hasn’t Set New Lows
PLAY: Buy the QID March 60 Calls (QID CH) at or under $4.80, good for the day. Place a protective stop limit at $2.10 and a pre-determined sniper sell at $7.00.
Dear Bottarelli Research Member,
Without question, we have a market on a hamster wheel. Case in point, the Dow was down 250 points on Monday, and then up 240 points on Tuesday. In other words, we have lots of movement but little headway. Unfortunately, this plays into the hands of the bears. As you know, every rally over the last 12 months has been met with even more levels of extreme selling pressure, and today appears to be no different. You can see today’s tick on the Dow chart below:
What’s more concerning is that the major market averages remain at 12-year lows. Anyone who bought an index fund in 1998, for example, is now showing a loss. Even more troubling is the fact that only six stocks on the Dow are showing gains over the last ten years. Unreal! I’ve said it before, but I’ll say it again: Buy-and-hold investing is dead. The only way to survive and prosper in a market like this is to trade — and I’ll continue to navigate you through these troubled waters to the best of my abilities.
Looking at our current positions, we’re seeing some headway in our PCP March 60 Puts (PCP OL) and KSS March 35 Puts (KSS OG). KSS continues to languish below its 50-day moving average, which means a breakdown can come at anytime. Just remember, KSS reports earnings after the close tomorrow, so I’ll keep you updated on how to handle this situation going forward.
PCP is also giving back all of yesterday’s gains, which should help our March 60 puts move further into the profit zone. Hold for more gains.
Over on the call side, shares of CMG are re-testing the support level at the 50-day moving average, so continue to hold your CMG April 60 Calls (CMG DL).
And finally, I must say that it’s been quite a wild ride for our AGU March 40 Calls (AGU CH). It seems like AGU is up or down $3.00 every other day, which pushes our calls all over the map. Today’s news is that Agrium made a hostile takeover bid for rival CF Industries at $72.00 per share, which is a 30% premium to yesterday’s closing levels. In a market like this, that’s a powerful offer. And it goes to show you that the fertilizer industry remains strong.
On this news, shares of AGU are down, but I feel this could only be a temporary event. Chart-wise, the stock remains above the 50-day moving average, which is strong. Let’s maintain our calls.
In terms of a new play, I’d like to once again add calls on the UltraShort QQQ ProShares (QID – NYSE). The rationale is quite simple. Unlike the Dow and the S&P 500, the NASDAQ has yet to hit new 52-week lows. Thus far, names like Apple, Google, and Amazon.com have helped the index outperform the major market averages. But I don’t think this will last for too much longer. Eventually, even the top companies will give way to the bearish economic market conditions, and this will spark a move on the NASDAQ below its November 2008 levels. A look at the NDX chart below shows that this could be a substantial fall.
To profit off this move, let’s add March calls on the QID, which coincidently is hitting its own support level right now at its 50-day moving average. Let’s increase our short exposure by adding calls now.
PLAY: Buy the QID March 60 Calls (QID CH) at or under $4.80, good for the day. Place a protective stop limit at $2.10 and a pre-determined sniper sell at $7.00.
And as always…
Lock and load!
Sincerely,
© 2012 CSR Group, LLC. All rights reserved. Published in USA.
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