Oddities Abound

Suspicious Trading Patterns in Gold, Treasuries, & Markets

By Bryan Bottarelli
Thursday, June 25, 2009 2:32 PM EDT
Thu, 25 Jun 2009 18:32:00 GMT

Dear Bottarelli Research Member,

Something about today’s up-move isn’t sitting right. First off, we began the day with a higher-than-expected unemployment number, which initially pushed the major market averages down. Then, as Fed chairman Ben Bernanke began getting grilled about his role in Bank of America’s acquisition of Merrill Lynch, the markets began to recover. The next thing you know, the Dow gained 100 points. And by the afternoon, the Blue Chips were up 180. At the same time, gold prices and Treasuries are also trading higher alongside the markets, which defies all logic whatsoever.

Adding to the foul stench is the fact that the Dow was on the verge of a breakdown, as noted earlier this morning, just before launching higher. Even Warren Buffett, in a CNBC interview with anchor Becky Quick, said that he doesn’t see the “green shoots” that others have spoken about – and this morning’s jobs number clearly supported his viewpoint. Buffett believes the economic picture will grow even darker before anything improves, saying “everything I see about the economy is that we have had no bounce.” Nevertheless, we’re seeing a powerful upside push. Add it all up, and something seems off.

INDU

As you can see from the Dow chart, the Blue Chips bounced back above the 50-day moving average today, but they’ve then encountered intra-day resistance at the 200-day moving average. If the 200-day proves to be the ceiling at 8,500, then we’ll be alright holding our SDS August 57 Calls (SDS HE). In many respects, shenanigans like we’ve witnessed today clearly illustrate why I decided to play August contracts instead of July.

Let’s maintain all of our positions going into the close of trading and see how things play out. Should anything happen, you’ll be the first to know. Until then…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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