Add ICE Calls

Plus: Maintain DO, BG & AIG

By Bryan Bottarelli
Thursday, July 30, 2009 2:49 PM EDT
Thu, 30 Jul 2009 18:49:00 GMT

PLAY: Buy the ICE August 100 Calls (IHH HT) at or under $4.30, good for the day. Place a protective stop limit at $2.10 and a sniper sell at $7.00.

Dear Bottarelli Research Member,

In your trading alerts issued earlier this week, I warned that the way the markets have been behaving, I wouldn’t be surprised if the tiny red candlestick formations could be false highs. As you can see from the chart below, this inclination was right on the money.

INDU

As it stands today, all three major market averages are pushing aggressively higher. As I write, the NASDAQ pushed above the 2,000 level for the first time since last October. At the same time, the Dow just pushed above 9,000, and the S&P 500 is approaching the 1,000 mark. Like a bulls-eye on the back of a buffalo’s behind, these are three very big price targets. In other words, hitting these targets could spark the next round of programmed selling. You see, top trading desks typically pre-set certain buy and sell targets, which tend to dictate major directional moves. It wouldn’t surprise me if these levels trigger the next round of profit-taking. If so, then the markets could finally see selling pressure that’s been non-existent all month long.

Therefore, when it comes to our open positions, I’d like to continue holding our DO August 90 Puts (DO TH) and our BG August 65 Puts (BGW TM). As you’ve clearly seen over the last two days, the price swings in the commodity sector can be fast and furious. Despite today’s up-move in both plays, I still think that the negative overtones are prevalent in the charts. Let’s hold for more selling pressure.

BG

DO

When it comes to our SPWRA August 30 Puts (QSU TF), the gap-fill that I expected to see has not materialized. Therefore, it’s time to cut this one loose, if you haven’t already done so. Sell.

SPWRA

And then there’s our AIG August 15 Puts (AIG TO), which continue to tread water. If the markets push south, AIG can fall very quickly. Hold.

AIG

In terms of new plays, it behooves us to re-establish some upside exposure. After all, we don’t want to be left in the dust if the markets continue to push upwards. Therefore, I think we have a nice continuation upside trend formation in shares of Intercontinental Exchange (ICE – NYSE).

ICE

As you can see from the chart, the stock got absolutely decimated in early July, when over-blown threats of regulation pushed shares from $120.00 down to $90.00 in the blink of an eye. But the stock is now starting to recover. Let’s ride the upside momentum for all that we can. Here’s the play…

PLAY: Buy the ICE August 100 Calls (IHH HT) at or under $4.30, good for the day. Place a protective stop limit at $2.10 and a sniper sell at $7.00.

And as always…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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