How Low Will Gasoline Go?

United States Gasoline (UGA – NYSE)

Monday, August 12, 2013

Back in July, we warned that “the expected recovery in refinery production – combined with the total gasoline inventory of 224 million barrels on June 28, 2013 (which is the highest level for this time of year since 1992), contributed to lower projected regular gasoline retail prices, averaging $3.38 per gallon in the second half of 2013.”

Since we passed on that tidbit, gas at the pump has fallen off -$0.0761 and is now sitting at a one-month low at $3.5985 per gallon. Several of the oil refiners we suggested shorting are also tumbling. But there is another way to play this slide…

UGA 081213

Bottarelli Research Tip: The United States Gasoline (UGA – NYSE) ETF follows gasoline futures on the NYMEX. UGA has already lost some -7% on this overage, and is a lock to continue dropping to $53.56. But if it breaks support there on a broad market downturn, it’ll trigger a Head & Shoulders Top that would sentence the ETF to plunge to $41.22. This is great news for drivers – but it would be brutal for gas refiners and dealers!

“This Company Dives So Regularly, You Can Set Your Watch By It”

Last week, American Eagle Outfitters (AEO – NYSE) warned of disappointing sales of women’s merchandise and weak store traffic – and the shares got hammered. This outlook presented Bottarelli Research LEAPS members with a stellar opportunity to play longer-term puts on the next major retailer to get crushed. No, it’s not Wal-Mart, Target, or Sears. If our projections are right, this play could fall $10.00 and easily hand you a 50% return on our longer-dated LEAPS options. To own this trade right now, join Bottarelli Research LEAPS.

Learn About LEAPS: If you have not yet heard about Bottarelli Research LEAPS, it’s designed for traders who are not able to follow the markets every second of the day. Trading alerts are published every Saturday morning, and the holding times are 3 to 4 months (as opposed to a few days). If you like our research but you’re unable to follow the day-to-day trading, Bottarelli Research LEAPS is perfect solution for you. Learn more about LEAPS here.

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Monday, 12 August 2013