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Phil's Morning Alert To Members

|Includes: The United States Oil ETF, LP (USO), XLF

PhilJune 7th, 2010 at 9:50 am |  

Good morning!

No volume to this open at all, very strange…

It’s all about our chart this week and we must take our bounce levels or we need to stay bearish.  Oil is very weak at $71.20 (stopped out from morning play at $71.50) and copper is down at $2.76 (also stopped out) and unless we can take back $72.50 and $3, there’s not much of a recovery going on here. 

I like oil off the $71 line but safer to sell USO puts, like the July $31 puts at $1.20 and you can be aggressive with those and the $31/33 bull call spread at $1.80 for net .60 on the $3 spread - oil at $72.50 should give you a winner.

Bounce levels are: Dow 10,250, S&P 1,100, Nas 2,260, NYSE 6,820 and Russell 666.  SOX 340 MUST HOLD  and TRANQ 2,000 has already failed and must be taken back! 

Since the open we’ve had low volume but relentless selling.  Watch XLF at $14 for a bad breakdown.  $14.50 is a little encouraging but until we’re back over $15 the Financials are just sad.

On the whole, I think this is a flush ahead of the real buying.  The futures were doing well and now they are trying to shake out the retailers before hitting the buy button.  At least I hoppe so.  

I like oil as it crosses over $70 again in the futures with very tight stops and I like copper futures too if they cross the $2.775 line again (now $2..,758).  We’re well positioned and we should follow through with plan to buy back DIA $102 callers we sold and hold the $103 calls, now .53 naked for the move (hopefully) back up but now we need to give up at .50 on the naked calls.

Disclosure: Positions as indicated but subject to change