Add NTES Calls

More End-of-Day Buying?

By Bryan Bottarelli
Tuesday, July 07, 2009 2:45 PM EDT
Tue, 7 Jul 2009 18:45:00 GMT

PLAY: Buy the NTES August 35 Calls (NGH HG) at or under $2.35, good for the day. Place a protective stop limit at $1.10 and a pre-determined sniper sell at $4.00.

Dear Bottarelli Research Member,

After a few failed intra-day rally attempts, the major market averages have maintained their downside bias. The Dow looks particularly week, as the Blue Chips are now drifting further away from their 50-day moving average. I continue to feel that this could trigger a drop to 8,000 (and below). See below:

INDU

Because of this, let’s continue to hold our ABX August 35 Calls (ABX HG), TLT August 95 Puts (ILT TQ), and SDS August 57 Calls (SDS HE). Taken together, these three positions give us a diversified ledger that’s short the major market averages, long gold, and short Treasuries – a position that I’m very comfortable with right now. But considering the mysterious end-of-day buying that we witnessed yesterday, I’d like to add one upside call to our ledger. In my view, this play is a hedge against more unexpected dip-buying. Plan to sell it for a quick gain on any up-swing.

Like I mentioned this morning, NetEase.com (NTES – NASDAQ) offers a nice mix of Chinese and technology market exposure. The stock has strong underlying strength, as their video game segment continues to fuel powerful growth. So as a pure play on dip-buying going into the close, let’s add NTES calls to our ledger.

NTES

PLAY: Buy the NTES August 35 Calls (NGH HG) at or under $2.35, good for the day. Place a protective stop limit at $1.10 and a pre-determined sniper sell at $4.00.

And as always…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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