Get Protected!
Add FAZ and DXD Calls
PLAY: Buy the DXD November 33 Calls (DOF KG) at or under $1.65, good for the day. Place a protective stop limit at $1.05 and a pre-determined sniper sell at $2.90.
PLAY: Buy the FAZ November 21 Calls (FAY KS) at or under $1.75, good for the day. Place a protective stop limit at $1.15 and a pre-determined sniper sell at $3.90.
Dear Bottarelli Research Member,
Good morning. Over the last week, I get the sense that the markets have become a lot more skittish. In other words, the dip buyers have not been as aggressive above the 10,000 level on the Dow, which has introduced a higher magnitude of selling pressure into the markets. As a result, the Dow has once again pushed below the 10,000 level, which has (in turn) caused a spike on the CBOE Volatility Index. You can see the correlation between the Dow and the VIX below:
What I find interesting is the fact that the Dow is now trying to use this near-term dip below 10,000 to establish a solid floor, which would serve as the next launching pad. Thus far, it has not worked. At the same time, the VIX has popped above the 50-day moving average, which has been a strong level of resistance. Therefore, we must remain cautious! In fact, looking at our two recent winners, both of them have come from ultra-short plays (SDS and FAZ). Therefore, let’s establish a protective position in the Blue Chips using the UltraShort Dow30 ProShares (DXD – NYSE).
PLAY: Buy the DXD November 33 Calls (DOF KG) at or under $1.65 (or best price) good for the day. Place a protective stop limit at $1.05 and a pre-determined sniper sell at $2.90.
At the same time, the banking sector continues to look ugly, so let’s double up our downside exposure by adding calls on the Direxion Daily Financial Bear 3X Shares (FAZ – NYSE).
PLAY: Buy the FAZ November 21 Calls (FAY KS) at or under $1.75 (or best price) good for the day. Place a protective stop limit at $1.15 and a pre-determined sniper sell at $3.90.
Finally, the strong upside momentum in shares of Green Mountain (GMCR – NASDAQ) look to be over. As a result, our GMCR November 80 Calls (QGM KP) have been officially stopped out. It was a great run on GMCR, but this position is now closed.
As always, I’ll keep you fully updated. Until then…
Lock and load!
Sincerely,
© 2012 CSR Group, LLC. All rights reserved. Published in USA.
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