The Battle Continues

Add More UGL Calls

By Bryan Bottarelli
Friday, March 27, 2009 10:26 AM EDT
Fri, 27 Mar 2009 14:26:00 GMT

PLAY: Buy more UGL April 33 Calls (UGL DG) at or under $2.60, good for the day. Lower your protective stop limit to $1.50.

Dear Bottarelli Research Member,

First and foremost, I’d like to congratulate you on a nice trading run. We all know that it’s been an erratic and unpredictable market environment, sparked primarily by news out of the Washington rather than by news out of Wall Street. Nevertheless, since March 16th, we’ve hit winners on nine straight trades. Dial it back to February 27th, and we’ve hit winners on 21 out of 25 trades, good for an 84% accuracy rate. In a market like this, I consider these results very strong. I hope you do too. So let’s keep it going!

Looking at today’s action, the major market averages are giving back some of their recent gains. I can already hear the financial reporters now saying, “the markets have had such an incredible run, it was widely expected that we’d give some back.” The trouble is, if the bulls get too complacent, they’ll open the door for the bears to come back in. In fact, if you look at today’s Dow tick, you’ll notice that the Blue Chips are experiencing resistance right at the 8,000 level (which is psychologically a difficult number to break through). If we see a move back down to the 50-day moving average, the bulls need to rigorously defend this level. If they fail, then a powerful down-trend will resume.

INDU

As a result, we’ll continue to position ourselves for profits no matter what occurs. Right now, that means holding our UGL April 33 Calls (UGL DG) and our AET April 25 Puts (AET PE).From a chart perspective, AET continues to drift around in no-man’s land. The stock is losing momentum below both the 50-day and the 200-day moving averages. Therefore, continue to hold your puts.

AET

At the same time, I’d like to lower our cost basis and add to our UGL April 33 Calls (UGL DG).As you can see, the UGL is sitting right at the 50-day moving average, which should prove to be a level of support.

UGL

At the same time, pure gold prices (noted in the chart below) are also tapping the bottom of their 50-day moving average, which should set the stage for the next upside run. Let’s take advantage and add to our position now!

GOLD

PLAY: Buy more UGL April 33 Calls (UGL DG) at or under $2.60, good for the day. Lower your protective stop limit to $1.50.

In terms of new trades, there’s a possibly that we could play a downside move in the oil sector, but I’ll follow up on this idea as the day progressed. Until then…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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