More Bloodshed: Dow Dips Under 10,000
Add APOL Puts
PLAY: Buy the APOL March 60 Puts (O:APOL 10O60.00) at or under $3.50 (or best price) good for the day. Place a protective stop limit at $2.10 and a pre-determined sniper sell at $5.50.
Dear Bottarelli Research Member,
First and foremost, congratulations on your DSX and EOG winners. I had some Internet trouble this morning, which I apologize for, but the timing all worked out in the end. This shows you just how important it is to have downside protection at all times. Congratulations on two nice winners in a downside market.
And speaking of a downside market, on Thursday, January 21st, I issued an alert titled “Danger Alert,” which warned you that the Dow Jones Industrial Average just broke below the 50-day moving average. On this day, I wrote, “This is something that we need to monitor very carefully. If this level does not hold, then lookout below. As you can see from the 200-day moving average (the red line that’s barely visible at the bottom of this chart), the resulting downside could realistically continue all the way down to 9,400. That’s 1,000 points lower than current levels.”
To follow up on this point, I wrote in yesterday’s alert, “Scale back to a weekly Dow chart, and you can get a clear understanding of just how far the Blue Chips could fall before hitting the next support level. As I mentioned before, a quick move from 10,000 down to 9,000 is not out of the question.”
As you look at today’s Dow chart, it’s clear that these warning signals were indeed worthy of respect. After all, as the morning has turned into afternoon, the Dow has dropped another 100 points, dipping to a low of 9,851. As this selling pressure intensifies, we could see even more investors run for the exit. Therefore, I’d like to add one new put to our ledger going into the close.
In my view, investors are now selling off the stocks that have gained the most over the last few months. This includes companies like Green Mountain (GMCR – NASDAQ), Amazon.com (AMZN – NASDAQ), and the for-profit education firms like ITT Educational Services (ESI – NYSE).In fact, looking at a for-profit play like Apollo (APOL – NASDAQ), we cold easily see a quick and decisive move down to $55.00 or even $52.50.Leading into next week, let’s carefully add APOL March puts now!
PLAY: Buy the APOL March 60 Puts (O:APOL 10O60.00) at or under $3.60 (or best price) good for the day. Place a protective stop limit at $2.10 and a pre-determined sniper sell at $5.50.
And as always…
Lock and load!
Sincerely,
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