Friday Update

No New Trades: RGLD, V, and QID Update

By Bryan Bottarelli
Friday, March 13, 2009 12:05 PM EDT
Fri, 13 Mar 2009 16:05:00 GMT

Dear Bottarelli Research Member,

Today is Friday the 13th, which is always a dubious day to place any new trades. Therefore, we’ll play things close to the vest today and simply get prepared for the trading action going into next week. No new trades will be issued today.

As I look at the major market averages, it’s quite apparent that we witnessed the classic “bear-market bounce” just as we expected when we began the week. As you can see from the Dow chart below, the Blue Chips moved from 6,500 up to current levels around 7,200, which is a 10.76% upside move. This fits perfectly into the parameters for a standard bear-market rally.

INDU

Going into next week, we should see the continuation of a downward trend, unless the bottom at 6,500 is indeed the market low. Personally, I think we’ll re-test the 6,500 level, and possible break below 6,000. Therefore, I’d like to maintain a downside bias leading into next week. This fully supports maintaining upside exposure to the gold sector via our RGLD April 40 Calls (MJQ DH). As you know, we entered these calls yesterday for $2.45 and they’ve traded as high as $3.00 today, so continue to hold for more upside.

RGLD

Also, I think that a pullback in the tech sector could provide the necessary boost to our QID March 69 Calls. Remember, we need to see these calls move above $1.00 to make a profit on our straddle position. Any aggressive downside move and we’ll be back in business. Hold.

QID

And finally, we have our Visa April 50 Puts (V PJ). Now I admit, these puts triggered our protective stop limit earlier this week, but I credit this upside move to the tremendous strength in the financial sector, which fueled the bear-market rally. In fact, Visa under-performed the broader financial sector, which tells me that the shares remain internally weak. As I study the chart below, I still feel that V is due for a move below the 50-day moving average, which could take the shares all the way down to the previous low at $42.50. As a result, I’ll continue to follow these puts for the benefit of anyone who is still holding them.

V

Until next Monday, have a good weekend. And as always…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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