Wow, we really pulled it out at the close!
Still ended the day well under 11K on the Dow and the S&P and Nasdaq’s week really didn’t amount to much in the end. If anything, this week made us look more, not less rangebound.
http://finance.yahoo.com/q/bc?t=5d&l=on&z=m&q=l&p=&a=&c=&s=%5Espx
While in now way a disaster, this remains what they call “a stock picker’s market“. Fortunately I am a stock picker so I am happy as a clam!
China’s Hang Seng Index is on a real roll, picking up close to 1,000 pts this month. While the Nikkei is in for a technical correction, don’t expect the money to come right over to our dreary markets, it looks like China may be in for another investing boom like we had over the summer (while our markets suffered).
Sadly we called the top just right on Thursday morning in “We are the World” and that premise continues to play out in the market action. I go into next week very cautious on my long positions but still seeing plenty of opportuinities for good plays.
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Most stocks were flattish for the week. I encourage you to look at the 5 day chart and put a sticky on top of your computer that says “2% is a very nice move, 5% is great – Don’t be greedy!” There is always another opportunity to make money so take profits when you can and have cash available for the next trade, you’ll sleep better too!
Take MER for example. We called this on Monday as a not quite TOTD (because I didn’t trust the market) and it ran up from $69.25 all the way to $71.25 (3%) on Wednesday. It pulled back to close at $70.95 on Wednesday which should have triggered a stop (lost 10% of profits) and on Thursday we said to get back to cash so that was certainly time to get out. While the stock may recover on a good market next week – wouldn’t you have been happier to just have the cash?
http://finance.yahoo.com/q/bc?t=5d&l=on&z=m&q=l&p=&a=&c=&s=mer
TASR is another good example – we called it a buy on Monday but by Tuesday afternoon I got rid of 1/3 of my stock at $8.75 and set a $9 stop on the rest, boy did I feel smart on Thursday! While I love this stock and am anxious to get back in, there is no reason to ride out the violent swings .
http://finance.yahoo.com/q/bc?t=5d&l=on&z=m&q=l&p=&a=&c=&s=tasr
12/6 TOTD IBM died after a hot start so it was a very good call to hedge the profit by selling the $85 call for $1.60 as we are .80 ahead already. This is now a no lose situation as the options will either expire worthless for a $1.60 profit or the Feb $85 will be worth a lot!
GM just keeps getting people to buy its stock and it just keeps burning them. This week it got taken up all the way to $22.50 before running back down to $20.25. You often hear me talk about the 50 dma on a stock and this chart is a perfect example of why you need to respect these lines.
http://stockcharts.com/gallery/?gm
CDI made a nice 8% move off Monday’s pick, don’t be greedy in this market!
As expected, AMZN took a real dive off of $46 and still has no support all the way to $41 but take the money at $42 and get out of this trade on any Nasdaq rally. This stock is so far below last month’s option point it may get forced back up next week by Market Makers.
HD was a great call on Tuesday morning but an even greater call to get out on Thursday morning with a nice double on the Feb $42.50s.
DNA took our predicted dip on Wednesday but looks like it might be stable enough to buy at $86. Wait for market direction but this one can be a real star.
EK had a great pullback so we will have to look for a possible entry next week.
I got stopped out of GLW with a triple on the Jan $20s. My rule for the last week of options is to have no current month positions. If you like your position roll it over to next month but don’t risk being wiped out by a 1 day move. If you don’t like it enough to spend the money to roll it over, you should be selling!
I was dead wrong on GAP on Monday, the stock turned back over its 50 dma of $30.25 and may recover further, possibly just option dressing though so just stay away from this one.
I was even deader wrong on YHOO outperforming GOOG last week. We got out with little damage on Wed am (which is why I always start my day looking for up and downgrades no matter how incompetent the analysts are!). I really like YHOO coming into earnings as expectations are very low.
VZ was one of the few picks that went up every day last week – don’t be greedy!!!
COST was another consistent gainer but I think this one has room to run. We are up 15% on the April $45s so we can set a stop at $6.60 (10%) and relax – not a bad week’s work!
Both BZH and SNDK gave me heart attacks on my puts but my faith in the charts was finally rewarded on Thursday. WFMI on the other hand is my pet short and I love it dearly…
ATYT came close enough to our pullback target of $16.50 to trigger the Aug $17.50s for $1.80 (dropped so fast my basis was $1.70) before heading back up. Now we wait and target selling the Feb $17.50s for no less than .90 – I will try to update this one.
Wednesday’s pick MSFT was blah for the week but the Feb $27.50s are still up 20% from our pick. You can still buy these calls for .50 now and I highly recommend them if the Nasdaq looks like it’s moving back up next week.
ABX $30 calls were not a winner on Wednesday but things are looking up for next week with gold spiking toward $560. While I am very long bullish on gold, I am hoping for a pullback before establishing leap positions.
The most baffling move of the week was the decline of BVN, another miner I like. This is possibly option related and the Feb $30s look very nice to me at $1.35.
MCD is stuck in the option expiration shuffle but I still like the March $32.50s.
Thursday TOTD GTRC has been flattish and I should have accounted for option pull after the nice run it has had. The fundamentals are there and I believe in this stock but it probably won’t move up until after Friday next week.
Fridays TOTD #1 PFE was flat but was a nice profit if you followed instructions and waited for the bounce. Even if you missed it, I’m still comfortable with the .80 entry point on the March $25s.
Friday TOTD #2 NKTR gave us a great entry point at $19.15 and the calls were sold for a whopping $1.80 for what I think will be a nice, safe 10% profit.
Next week should be a great week to trade oil and gold so have a nice weekend and we’ll see you on Tuesday!
– Phil
