Dow 9,000, Then Sell?

Bias Is Up, For Now

By Bryan Bottarelli
Friday, June 05, 2009 1:24 PM EDT
Fri, 5 Jun 2009 17:24:00 GMT

Dear Bottarelli Research Member,

Good afternoon. Thus far, it’s been a volatile session. The pre-market futures all moved to the upside after today’s jobs report showed that we lost only 350,000 jobs last month. You’ve already read my opinion on this, so I’ll quickly move on. Shortly after this opening-session pop, the markets drifted lower, lead by sell-offs in the commodities, oil, and metals markets. But as the morning turned into afternoon, we’ve once again seen buyers step in to buy the dips. This tells me that the bulls are still not ready to concede. In response to this dip-buying, the Dow has pushed above the 200-day moving average, shown below. Technically, this is a bullish signal (if sustainable, that is).

INDU

From a positional standpoint, today’s move is encouraging. Despite being down on our HES June 60 Calls (IGG FL), JRCC July 22.50 Calls (JQM GX), and DRYS June 7.50 Calls (OOC FU), I’d like to hold all three positions going into next week. As I mentioned before, support at the 50-day moving average could trigger the next upside push in DRYS. Thus far, it’s still holding the line, but I need to see an up-move off this level before adding to our position. Look for this potential play early next week.

DRYS

After consolidating between $22.00 and $24.00, it looks like JRCC might be ready to move towards new highs.

JRCC

And if HES can pinch above the tight range of the 50-day and the 200-day moving averages, we could see another push towards $70.00.

HES

Going into next week, I think the strategy will be to play an upside bias until the Dow hits 9,000. At this point, it would be a smart idea to add some calls on the UltraShort Dow 30 ProShares (DXD – NYSE). That way, we can profit off any quick and sudden downside moves.

DXD

But as always, timing and sentiment will be the key. So for now, let’s sit tight. Going into next week, we’ll adopt this strategy at the most appropriate and opportunistic time. Until then…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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