The U.S. market is setting up for a pretty strong opening dip if the S&P futures, currently down -16 points, holds that level until the open.

I think the Libyan news is over done as far as our market goes. Libya is not important to the world economy and very few nations will even have any contact with Libya. Gadhafi is a tyrant, a buffoon and a social outcast. Most countries will be glad to see him go. He has murdered thousands of his citizens over the last 40 years and created plenty of enemies when he was involved in the Pan Am bombing over Lockerbie that killed 263 people.

While the press is running in circles reporting news with very few facts the western world is watching an enemy lose his grip on power. For that reason I think the opening drop on Tuesday will be short lived.

I am going to recommend a couple plays to be bought on the opening dip. Obviously there is more risk since we don't know were the dip will stop or when it will rebound.

If you are less risk averse then pass on these trades or take smaller positions. With Tuesday the first day with March options as the front month the premium should decline rapidly once the initial dip is over.

Jim Brown



Current Portfolio




Current Position Changes


None


New Recommendations


FSLR - First Solar $168.22 (Short Put)

We are going back to the well again on First Solar. The negative market should knock a big chunk off FSLR and inflate already high premiums even higher. Once the market rebounds the solar stocks should do well because they react positively to high oil prices. This is a high-risk trade but it could be very profitable.

Try not to sell it on the opening print. Give it a minute or two for other buyers of the puts to push up the price.

Sell short FSLR March $150 Put, currently $3.15, stop $155

FSLR Chart


DD - Du Pont $56.01 (Short Put)

Dupont has been on a steady climb and knee jerk profit taking could knock several dollars off the stock price. Support is about $53.50 with the close at $56 on Friday. I am going to recommend the $55 strike and hope the initial Tuesday dip does knock the stock down to $54 or lower. That will put us in the money but I think it will be a brief stay.

Try not to sell it on the opening print. Give it a minute or two for other buyers of the puts to push up the price.

Sell short March $55 Put, currently 83-cents. Stop $52.50

Chart of DuPont


FDX - FedEx $98.32 (Short Put)

FedEx rallied after earnings last week and closed at a new high on Friday. There is a good possibility some of that new profit will be extracted at Tuesday's open. Support should be $95 and I want to sell the $95 put. If the stock dips to that level the current $1.56 premium could double.

Try not to sell it on the opening print. Give it a minute or two for other buyers of the puts to push up the price.

Sell short March $95 put, currently $1.56, stop $93.50

FedEx Chart


New Long Term Recommendations


None - Waiting for a "real" market dip, not a one day wonder


New Aggressive Recommendations


None