Standing Pat (For Now)

Maintain Positions

By Bryan Bottarelli
Thursday, July 09, 2009 11:44 AM EDT
Thu, 9 Jul 2009 15:44:00 GMT

Dear Bottarelli Research Member,

Welcome to another day of choppy and inconclusive intra-day action. As I write, the major market averages (shown via the SPX chart below) are hanging by a thread to the 200-day moving average. The Dow, as you know, is already below this level. If the bulls give up, then we’re looking at another decisive downside move ranging between 25 and 50 points on the SPX. Therefore, we’ll maintain our downside bias. If this level does indeed break down (and I see no signs of external market forces artificially propping things up), we’ll once again jump into Ultra-Short calls on either the SDS or the DXD.

SPX

But in the meantime, I’d like to stand pat with our current positions. After a morning pop, oil prices have once again drifted lower. When this reversal gets applied to the DUG, we’ll be back on track with our DUG July 21 Calls (DZG GU). Hold.

At the same time, our market-neutral position of ISRG July 140 Puts (AXQ SX) combined with NTES August 35 Calls (NGH HG) is also moving our direction. As you can see below, NTES is holding strong at the 50-day moving average. Hold.

NTES

And on the flipside ISRG continues to experience weakness, which should push it below $140.00 very soon. Maintain your puts for more gains.

ISRG

Until the current tug of war gets decided, let’s maintain our current positions. Should any conclusive new evidence appear, you’ll be the first to know. Until then…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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