Take K Profits!

Lock in Quick 21% Gainer

By Bryan Bottarelli
Tuesday, July 07, 2009 10:50 AM EDT
Tue, 7 Jul 2009 14:50:00 GMT

*PLAY: Sell your K August 45 Calls (K HI) at market, good for the day.

Dear Bottarelli Research Member,

Good morning. In these market conditions, we have to be super-nimble. Therefore, I’ll keep this short and sweet.

For most of yesterday’s trading session, the major market averages moved lower. But at the end of the day, we witnessed some obscure buying that pushed the Dow up. With such bearish technical formations on the Dow and the S&P, I have only one guess as to who is initiating this dip-buying. Therefore, we’ll do our best to maintain a diversified trading ledger, taking any quick profits along the way. In fact, that’s what I’d like to do right now with our Kellogg’s play. As you know, we entered the K August 45 Calls (K HI) as a “safe haven” play yesterday for $3.30. Despite early market weakness, K has moved higher, which has pushed our calls up to $4.00. Let’s take the money and run.

PLAY: Sell your K August 45 Calls (K HI) at market, good for the day.

At the same time, our SDS August 57 Calls (SDS HE) are about to push higher on any extended downside move. Hold for more gains.

With gold prices attempting to establish a bottom, I continue to like our ABX August 35 Calls (ABX HG). Hold.

And the mood on Treasuries continues to worsen. With longer-dated auctions scheduled for Wednesday and Thursday, that’s when our TLT August 95 Puts (ILT TQ) could hand us a nice return. Hold.

Looking at new plays, we have a nice opportunity for a two-part play on technology and China from NetEase.com (NTES – NASDAQ). They operate an interactive online community in China that provides online games, Internet portals, and other wireless services. If the markets continue to drift lower, we might be able to pick up some NTES calls in anticipation of more dip-buying going into the close.

NTES

If and when it’s time to move, you’ll be the first to know. Until then…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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