Bulls on Another Run

Close WYNN and CTRP

By Bryan Bottarelli
Wednesday, August 12, 2009 10:41 AM EDT
Wed, 12 Aug 2009 14:41:00 GMT

Dear Bottarelli Research Member,

Good morning. Just like that, all of yesterday’s selling pressure has been absorbed by today’s upside push. From a chart perspective, today’s Dow tick has now pushed above yesterday’s breakdown point, which is another indication that this market wants to move higher. Until the bulls stop buying every dip, the only tactical strategy that makes sense is to use these temporary market dips to get positioned in the strongest upside chart formations.

INDU

As you know, we tried to use breakdown patterns in WYNN and CTRP to play an extended downside move. But the unrelenting strength that we witnessed in July has carried over into August, which means that any breakdown indication is invalidated the following day with even stronger buying. As a result, let’s trim our downside exposure by selling our WYNN August 55 Puts (UWY TK) and our CTRP August 50 Puts (QCT TJ).

WYNN

Now I admit, the situation with WYNN continues to intrigue me. In less than one month, the stock has ran from $30.00 up to $60.00. Then, news came out that indicated that despite regulatory and recessionary pressures, it appears like the gaming stocks may have hit their bottom. In my view, this news has already been priced into WYNN, which accounted for the run from $30 to $60. This has left a very large void between $40 and $55. At it stands now, the stock is bouncing between $55 and $60. Right now, the play is to buy calls at $55 and then buy puts at $60. Keep it simple, at least until the consolidation pattern breaks up or down. I’ll continue to follow the trading patterns for more opportunities.

But in the meantime, let’s continue to hold our NTES August 45 Calls (NGH HI), GS August 165 Calls (GPY HM), KSS August 50 Puts (KSS TJ), and TBT August 50 Calls (TBT HX). NTES, GS, and TBT offer us an upside bias, and KSS could still face weakness if retailers like J.C. Penny and Abercrombie & Fitch report poor numbers on Friday. Should any new trading actions pop up, you’ll be the first to know. Until then…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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