The Beat Goes On

Another Blast

By Bryan Bottarelli
Friday, August 07, 2009 12:14 PM EDT
Fri, 7 Aug 2009 16:14:00 GMT

Dear Bottarelli Research Member,

This morning, the U.S. economy lost another 247,000 jobs, marking the 19th straight month in which the nonfarm-payrolls report has shown a decline. But since we’re seeing less and less job losses each month, the market is once again rallying on the news. As you can see from the SPX chart below, the “false high” that I warned about last week has once again been dwarfed by today’s upward push, making this market appear absolutely bulletproof. Folks, we have a market that simply refuses to go down – and one-sided markets always concern me. CNBC has even called it “the new bull market.”

SPX

If you’ll be attending the Taipan Wealth Conference in Chicago next week, I’m looking forward to showing you how certain people have been carefully orchestrating this upward move. I’m convinced that their latest action started on July 9th, just as the Dow and S&P 500 were about to confirm a Head and Shoulders formation. These actions have carried forward into today’s trading.

That’s why I will be altering my timing system – tinkering it in a way that better accounts for these directional maneuvers when it comes to our entry and exit prices. Looking back at some recent trades, I feel that the stock selection has been correct, but the timing of our entry prices has not. Often times, we’re a day early or a day late on the entry price. Starting next week, this will be something that we rectify.

So leading into next week, let’s clear out our trading ledger. If you haven’t already done so, today’s upward move has put us out of our SDS August 45 Calls (SSH HS). Sell. The same goes for our AEM August 60 Calls (AEM HL), which haven’t been able to parlay today’s upward move into an extended rally. Sell. And then there’s our STP August 20 Calls (STP HD), which are showing signs of bouncing off the 50-day moving average. But quite honestly, I wanted to see the stock rallying on a strong day like today, which has not been the case. Therefore, let’s close off our STP position as well. Sell.

STP

This leaves us holding the CTRP August 50 Puts (QCT TJ). As you can see below, CTRP has been unable to mount any sort of rally in today’s action, which just might be a sign of weakness ahead. Let’s maintain these puts going into next week and see if further selling pressure comes into play. Hold.

CTRP

In terms of the remainder of today’s session, I don’t plan to make any new trades. Rather, I want to see if this rally can extend into the close. Starting next week, we’ll utilize some new timing entries to rebound from the under-performance in July and August. So until then, have a good weekend. And as always…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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