More Weakness Ahead!

Hold DXD, UNP, and FLR Puts

By Bryan Bottarelli
Wednesday, June 17, 2009 10:43 AM EDT
Wed, 17 Jun 2009 14:43:00 GMT

Dear Bottarelli Research Member,

Good morning. I get the sense that the major market averages are getting set for another pullback. The bulls have yet to formulate any upside momentum. So once again, the bears are simply waiting for the buyers to throw in the towel, and that’s when they’ll pounce – and pounce hard. The Dow chart below shows a slight downside bias this morning, but we’ll see what happens as the day progresses. Now that we’re past the first hour of trading, we should really see the main plays step in and dictate the day’s directional move.

INDU

If the markets fall today, we’re nicely positioned via the DXD July 45 Calls (DXD GS), FLR July 50 Puts (FLR SJ), and UNP July 55 Puts (UHP SK). All three plays have moved into the profit zone today, so maintain all three puts for more gains.

On the flip-side, it’s time to adjust our bias by letting go of our APA July 85 Calls (APA GQ). With every commodity play falling yet again today, the sentiment is clearly to the downside in oil, metals, fertilizers, energy, and so forth. Therefore, if you haven’t already done so, sell your APA calls now.

At the same time, let’s continue holding the GDX July 40 Calls (GDX GN). As you can see below, the GDX is coming up on a very strong support level. If this level holds, we should see a quick turnaround going into the end of the month. As I noted yesterday, metals plays (such as AEM) are all closing in on nice support levels, so we could have a nice buying opportunity coming soon.

GDX

When it’s time to move on any of our positions, you’ll be the first to know. 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 June 2009