Selling Into Any Rally
Markets Can’t Sustain Any Gain
PLAY: Buy the FAZ March 20 Calls (FAY CT) at or under $1.85, good for the day. Place a protective stop limit at $1.10 and a sniper sell at $3.10.
Dear Bottarelli Research Member,
In a sudden change of sentiment, it’s clear that the major market averages are now unable to sustain any sort of upside momentum. This morning, for example, the Dow was trading 100 points higher. But as I write, the Blue Chips have given back all of those gains, and now trades in the red. The chart below shows this “selling into strength” pattern quite clearly.
As you can tell, this pattern does not paint a strong picture going forward – which is something that I warned about earlier this week. So, in addition to holding our protective play on the DXD March 30 Calls (DOF CD), I’d like to further strengthen our level of protection by adding March calls on the Direxion Daily Financial Bear 3X Shares (FAZ – NYSE).
Here’s the thinking…
Now that President Obama is ignoring the advice of Geithner and Bernanke, and listening to the advice of former Federal Reserve Chairman Paul Volcker (who has been outspoken in his position to advocate stronger restrictions on banks), the ramifications of this political shift could cast a storm cloud over the financial sector for quite some time. Therefore, let’s prepare to profit if this political maneuver triggers more selling pressure in the financial sector. Here’s the play…
PLAY: Buy the FAZ March 20 Calls (FAY CT) at or under $1.85, good for the day. Place a protective stop limit at $1.10 and a sniper sell at $3.10.
And as always…
Lock and load!
Sincerely,
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