Broadside Selling: Will It Last?

Close POT and DO Positions

By Bryan Bottarelli
Monday, September 21, 2009 10:17 AM EDT
Mon, 21 Sep 2009 14:17:00 GMT

Dear Bottarelli Research Member,

Good morning. We’re seeing a broad-based sell-off today, as the major market averages are down alongside gold and oil. Whether or not this morning’s dip gets bought is always the critical question of the day, so that’ll be the critical trading catalyst I’m watching. In the meantime, today’s opening-day sell-off comes to us with good and bad news.

The bad news comes out of Saskatoon, Canada. That’s where fertilizer seller Potash Corporation of Saskatchewan unexpectedly lowered their third-quarter profit expectations, pushing the stock $5.00 lower. Because of this drop, our POT October 100 Calls (PYP JT) have triggered our protective stop loss. News releases like this are impossible to predict, and we unfortunately got caught at a bad time. As a result, this position is closed.

Over on the plus side, shares of Wynn Resorts (WYNN – NASDAQ) have shrugged off the market weakness to push higher in today’s action. This could also carry over into Las Vegas Sands (LVS – NYSE) as well. Hold both positions.

WYNN

We’re also somewhat protected against today’s drop thanks to our SDS October 40 Calls (SSH JT), which we entered last week for $1.95. As of this morning, they’ve hit a high of $2.30, so maintain these ultra-short calls for added protection. I’d also like to maintain our CSIQ October 17.50 Calls (GQA JW), which we entered last week for $1.70. The solar catalyst remains strong, and CSIQ is getting set for the next upward push. Hold.

CSIQ

When it comes to the commodity sector, oil’s sizable pullback today has also stopped us out of our DO October 95 Calls (DO JB). From a chart perspective, DO has a strong support point at the 50-day moving average just under $90. If shares dip down to this level and hold (combined with renewed strength in oil), we could jump back into calls and recapture this position. But for now, exit the position entirely.

DO

I’m sure I’ll follow up with further alerts as the session goes on. Until then…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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