Tight Trading

Bulls Attempt to Buy the Dip

By Bryan Bottarelli
Thursday, May 14, 2009 12:28 PM EDT
Thu, 14 May 2009 16:28:00 GMT

Dear Bottarelli Research Member,

Good afternoon.Thus far, it’s been a rather tight trading session. After two strong selling days on Monday and Wednesday, the bulls are attempting to buy into the dip in today’s action. But as you can see from the Dow chart below, this dip-buying is becoming less and less powerful. I get the sense that the last group of buyers is getting in now. Once they’re positioned, we’ll then resume the fall down to the critical 50-day moving average test at 7,750.

INDU

From a position standpoint, the AEM June 55 Calls (AEM FK) that we entered yesterday for $2.90 are currently trading at $3.10, so maintain this play for more upside.

AEM

Plus, our two Ultra-short plays continue to show signs of life — notably the SRS June 25 Calls (SAK FE), which traded as high as $4.70 in today’s action. That’s a slight gain from our $4.60 entry price back on April 29th. Since hitting this high, the SRS has fallen back down, but it just goes to show you how quickly these ultra plays can reverse course when we experience the proper selling pressure. Continue to maintain your SRS calls and your FAZ June 8 Calls (FAY FH).

SRS

We’re also seeing some life out of our short-squeeze play, the GMCR June 90 Calls (QGM FR). Despite still being down from our $4.95 entry price on 5/11/2009, today’s chart formation could indicate a near-term support level. Let’s continue to hold this play for a coming upside burst.

GMCR

In terms of new trades, we have a potential upside breakout in shares of Intercontinental Exchange (ICE – NYSE). Looking at the daily and weekly charts, if ICE can break through the double-top at $105.00, we could have a potential move back up to the previous high at $160.00.

ICE daily chart:

ICE

ICE weekly chart:

ICE #2

For now, let’s wait for confirmation before making any new trades. As always, if any instant trading opportunities arise, you’ll be the first to know. Until then…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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