Re-Entering Gold

Add UGL Calls

By Bryan Bottarelli
Monday, April 20, 2009 9:56 AM EDT
Mon, 20 Apr 2009 13:56:00 GMT

PLAY: Buy the UGL May 30 Calls (UGL ED) at or under $1.90, good for the day. Place a protective stop limit at $0.85 and a pre-determined sniper sell at $3.00.

Dear Bottarelli Research Member,

Good morning. After a 5-week rally, the major market averages are kicking off the week with a strong downside move. We prepared for this type of move by adding the FAZ May 9 Calls (FAY EI) and the SMH May 22 Puts (SMH QJ) to our ledger late last week. Right now, both positions continue to look strong, so hold both of them for more gains.

On the other hand, our HES May 60 Calls (IGG EL) and our MOS May 45 Calls (MOS EI) have each failed to hold their support lines at the 50-day moving average. This is our official exit signal. If you recall, we initiated both plays expecting a bounce at the 50-day moving averages — and it has not happened. Therefore, if have yet to do so, close out both plays now.

At the same time, continue to hold your TBT June 44 Calls (TBT FR). And as one new play, I’d like to get re-positioned in the gold markets via the Ultra Gold ProShares (UGL – NYSE), which moves at the rate of 2x the daily performance of gold bullion. As you know, gold prices have recently moved from $1,000 down to $850. As you can see from the chart below, this could be a very strong level of support.

GOLD

As a result, I’d like to get positioned to play a bounce using UGL May calls. Here’s the play…

UGL

PLAY: Buy the UGL May 30 Calls (UGL ED) at or under $1.90, good for the day. Place a protective stop limit at $0.85 and a pre-determined sniper sell at $3.00.

As always, I’ll have more updates as the day progresses. Until then…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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