Add ESI Puts

Plus: Maintain QID and TBT Positions

By Bryan Bottarelli
Tuesday, April 07, 2009 12:00 PM EDT
Tue, 7 Apr 2009 16:00:00 GMT

PLAY: Buy the ESI April 105 Puts (ESI PA) at or under $4.20, good for the day. Place a protective stop limit at $2.10 and a pre-determined sniper sell at $7.50.

Dear Bottarelli Research Member,

First off, congratulations on your AEM May 50 Calls (AEM EJ) profits. As expected, today’s pullback is causing an up-tick in gold prices, and we were positioned to capitalize on this move perfectly. Going forward, I still think gold has a lot of room to move upwards, but the timing of such moves will be critical. Similar to the rest of the market, metals prices will remain volatile, so we’ll continue playing these intra-day moves as precisely as we can. Gold chart below:

GOLD

In the meantime, the big question today will be whether or not the bulls once again step in and buy this dip. As you can see from the Dow chart below, the Blue Chips have paused at the 8,000 level, which could result in a move back down to 7,500. That’s the next support point, which is only 300 points from current levels.

INDU

On the other hand, the NASDAQ has a lot more room to fall. As you can see from the NDX chart below, the technology sector has been gapping aggressively higher lately, so any forthcoming market weakness should lead to a more aggressive pullback. That’s why we’re holding the QID April 45 Calls (QID DS). Hold for more gains.

NDX

At the same time, it appears like the upside momentum that carried the online and secondary education stocks is now wearing off. As a result, I think we have a nice opportunity to play April puts on ITT Educational Services (ESI – NYSE).As you can see below, ESI looks ready to test the 200-day moving average at the $90.00 level, which would represent a fall of around $10.00 from current levels. Let’s carefully play a sharp pullback now.

ESI

PLAY: Buy the ESI April 105 Puts (ESI PA) at or under $4.20, good for the day. Place a protective stop limit at $2.10 and a pre-determined sniper sell at $7.50.

And as always…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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