Add QID Calls

Playing a Dip

By Bryan Bottarelli
Friday, March 27, 2009 1:20 PM EDT
Fri, 27 Mar 2009 17:20:00 GMT

PLAY: Buy the QID April 46 Calls (QID DT) at or under $4.10, good for the day. Place a protective stop limit at $2.10 and a pre-determined sniper sell at $6.50.

Dear Bottarelli Research Member,

With the major market averages approaching their lows of the day, I’d like to carefully dip a toe back into the water using calls on the UltraShort QQQ ProShares (QID – NYSE).As I noted earlier this morning, everyone is expecting a market pullback. The headline on Yahoo! Finance reads, “Investors Cash in Some Gains From Big Rally.” CBSMarketwatch offers a similar headline, which reads, “Skeptics Reclaim Wall Street.” After a gain of 8% on the week, it’s easy to see why selling pressure will now be expected. Therefore, let’s profit off it!

A quick look at the NASDAQ 100 (NDX) shows a possible triple top formation at 1,300. If this formation holds, we could easily see a move back under 1,200 next week.

NDX

Furthermore, a look at the QID chart shows an over-sold condition, which could ignite a move back up to the 200-day moving average. From a trading perspective, it’s certainly worth taking a shot at April calls. On that note, here’s the play…

QID

PLAY: Buy the QID April 46 Calls (QID DT) at or under $4.10, good for the day. Place a protective stop limit at $2.10 and a pre-determined sniper sell at $6.50.

And as always…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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