House on Fire

Dow Drops 300

By Bryan Bottarelli
Monday, March 30, 2009 3:09 PM EDT
Mon, 30 Mar 2009 19:09:00 GMT

Dear Bottarelli Research Member,

The major market averages have been weak all day long, and the losses are getting worse as the day progresses. As I write, the Dow has dipped underneath the 7,500 level, and the Blue Chips are now threatening to erase all of the gains from last Monday’s powerful 500-point rally. If the selling pressure begins snow-balling, things could get very ugly.

INDU

Having said that, I’d like to stand pat right here. After all, it’s pretty clear that the markets are super-volatile right now, so I don’t want to run the risk of buying even more puts and getting side-swiped by a freak rally tomorrow.

Now don’t get me wrong, I still want to maintain a bearish bias. I just want to maintain that bias using our current positions, which include the AET April 25 Puts (AET PE), UGL April 33 Calls (UGL DG), and MTB April 45 Puts (MTB PI).

Specifically, the MTB puts that we just entered today have now traded as high as $5.40, good for a nice 28% intra-day gainer. Unless we reach our pre-determined sell target at $6.00, let’s hold these puts going into tomorrow for more selling pressure. If I see indications that the downside move can extend itself, we’ll add more puts to our ledger. But until then, let’s remain nimble. And as always…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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