That went just fine for a Monday!
Our indexes were strong all day, only slightl spooked by the 2pm oil pump (which ultimately failed).
The Dow built up a nice buffer and finished at 12,131 while the S&P hit 1,384, the Nasdaq led the pack with a new high at 2,406 while the NYSE dragged along with a 4 point loss (still 8,823).
The SOX retested the 200 dma and finished just under at 468 and the transports reached a 4-month high of 2,643, still 10% below the May highs. For the transports, last winter was the high of the year as it was they year before that.
Oil had a really rough day and the pumpers are running into heavy resistance as you can see from the volumes on this USO chart.
Crude finished down a buck at $58.58, a penny above my old, non-dollar adjusted target. We need to break the true international level of $58.39 to confirm a downward momentum. A close below that may lead to another nice move down with our US target of $57.15 and our world price of $56.89 as the next stops.
Gold dropped $4 to finish the day at $624 as the dollar moved up .34, hopefully firming up over 85.
Bottom line: Oil is falling twice as fast as the dollar is rising and the dollar is 1.50 below its 200 dma so it will take very little to bring oil back down to $55. If the ECP and the BOJ do not raise rates (right before Christmas) it will both strenghen the US Dollar and signal weakness in the global economy – also bad for oil and good for the dollar.
The dollar is, in fact underinvested by most foreign traders as the US currency has been long out of favor (Buffet was famously short last year).
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Our weekend picks did fairly well today.
I made a mistake with ATVI, as the earnings were last Monday so that was a no trade. KNOT did as expected but jumped up too fast on the way to a 7% gain so no entry there either but we’ll keep an eye on it.
GE took off too fast as did NTFY. BBY missed by .40 and I didn’t chase. Cramer got on the TM bandwagon yesterday but he’s not big enough to move that stock but it might mean it’s not going any lower…
AEP Dec $40 puts came in at .40.
MOT Jan ’08 $22.50s were a comment play at $2.65.
GG $27.50s were taken at .60, well below our target and half out at .95 (up 58%) already!
HRL June $40s took off and ended at $1.40 (up 22%).
PEP was plunging so I took the KO Dec $45 puts in comments for .25, just in case it spreads!
PLCE was a fun day trade! Our weekned watch put shot up to $72, annnounced and option scandal, dropped to $69 went back (for some reason) to $71 at 11, where we took the Dec $70 puts for $2.60, stopped half out for $3.20 (up 23%) just 10 minutes later and they finished the day at $4.50 (up 73%)!
NFG Jan $35 puts worked already, finishing at .45 (up a dime).
TIE June $25s came in at $7.
TSO was just daring me to buy the $65 puts for .40 and I’m up a nickel so far (I know, I should just leave that sector alone!).
TWX Dec $20 puts stopped out at .60 (up a dime).
TXN Apr $27.50s hit our $3.20 entry.
So that was a busy day for our new picks! Some other interesting moves were:
DALRQ is up 40% from my 11/5 pick but the Jan ’08 $2.50s are just a dime (up 100%).
I was getting worried that Cramer was going to beat me with that CMG pump but it seems to be wearing off already and the Dec $65 puts are back to $1.50.
Our evil plan is working and it looks like the RNWK $12.50s we sold for .20 will expire worthless, leaving us with a .05 basis on the Dec $12.50s (now .25!). Mu ha ha! If the sock breaks below $11.40 I buy out the caller for .05 and take half off the table for a double and a free ride on the rest.
WWAT is flying, up 50% to .30 so far! I’m raising the stop to .28 as I’d rather rebuy than ride it down if it can’t break the 200.
Steve WYNN declared a special dividend of $6 per share and the stock gained $6.48 – a real jackpot! Lucky for Steve he happens to own 24M shares himself. This, my friends, is the fair way to return money to shareholders, especially as the money came from a windfall (they sold an extra casino license for $900M).
