Two Trends in Focus

Dow Daily vs Dow Weekly

By Bryan Bottarelli
Monday, April 27, 2009 10:40 AM EDT
Mon, 27 Apr 2009 14:40:00 GMT

Dear Bottarelli Research Member,

For the last five weeks, investors have been buying into any market dip. We’re seeing this same thing this morning, as money that’s sitting on the sidelines is chasing after the upside rally that began in early March. An opening loss of 85 points has nearly worked its way back to even. As you can see from the daily Dow chart below, we still have a Blue Chip up-trend in place:

INDU

But when you back up and look at the same Dow chart over a weekly time-horizon, you’ll see that the Blue Chips are currently enjoying an upside counter-move well within the parameters of a clearly defined down-trend. Check it out:

INDU#2

In a situation like this, it’s best to respect the upside move, while also being prepared to benefit when the buying momentum comes to an end. That is why we’re holding ABX June 30 Calls (ABX FF) and CMED May 20 Calls (QCY ED), combined with FAZ June 8 Calls (FAY FH), SRS May 32 Calls (SAK EZ), and SMH May 22 Puts (SMH QJ). As it stands right now, I’d like to maintain all of these positions. I know that SRS moved lower on Friday afternoon, but there’s mounting evidence that the commercial real estate market will kick-start the another real estate down-leg. Therefore, maintain these ultra-short calls.

While I don’t have any new trades in this alert, I would like you to keep a close eye on Priceline.com (PCLN – NASDAQ). I’m holding puts on PCLN over in my Bottarelli Research LEAPS service, based on the idea that PCLN is the most overpriced stock on the NASDAQ right now. And today, the stock is down over $5.00 on swine flu fears.

PCLN

After all, not many folks are eager to travel right now, and this is a very negative catalyst for PCLN. If the downside momentum gets going, shares have a lot of room to fall. Therefore, keep an eye on this one for a potential downside put play.

As always, I’ll keep you fully informed on any and all trading actions. Until then…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

© 2012 CSR Group, LLC. All rights reserved. Published in USA.

Information, opinion, research, and commentary contained herein is obtained from sources believed to be reliable; their reliability, however, cannot be guaranteed. The maxim of Caveat Emptor applies — let the buyer beware. Bottarelli Research does not provide individual investment advice, act as an investment advisor, or individually advocate the purchase or sale of any security or investment.

Investments recommended in this service should be made only after consulting with your investment advisor, and only after reviewing the prospectus or financial statements of the company. Bottarelli Research reserves the right to use e-mail endorsements and/or profit claims from its subscribers for marketing purposes. All names will be kept anonymous and only subscriber’s initials will be used unless express written permission has been granted to the contrary.

CSR Group, LLC expressly forbids its writers from having a financial interest in any security recommended to readers. Furthermore, all employees and agents of CSR Group, LLC and its affiliate companies must wait 24 hours before following a published recommendation.

Bottarelli Research alerts contain time-sensitive information, and are published and distributed to members with urgency. Because of this, not all published materials can be adequately proofread, and an occasional spelling or grammar error may exist.


Other Options Alerts From April 2009