OK, that went pretty much as expected.
What else could you expect though with oil at $68? Once again, if you take out the tremendous gains in oil stocks then you do not have a very pretty market at all!
There were many individual signs of strength, most encouraging was a fairly strong showing from Apple (my major concern of the morning), which gained 4% for the day and stayed strong against a declining Nasdaq rally in the afternoon. After sweating my decision to buy in for a few days, my AAPL $80 calls rocketed to $1.25 for a 50% gain today!
The Dow is resting at 10,900 and needs just any excuse to move back to 11,000 while the other indexes are rolling right on to new highs as long as the Dow doesn’t pull their chains down.
Gold finished at $567, looking strong all day. Don’t forget gold poker rules and be ready to sell at any moment but ABX and BVN are both being held back and are acting like horses at the gate, ready to fly up at the slightest provocation.
http://finance.yahoo.com/q/bc?s=GLD&t=3m&l=on&z=m&q=l&c=abx
http://finance.yahoo.com/q/bc?s=GLD&t=3m&l=on&z=m&q=l&c=bvn
I am fairly confident that things will go well this week but also happy I have cash ready to go either way because we can’t control the economic numbers in case they are determined to surprise us.
Another thing we can’t control is Greenspan, who is quoted as having said: “If you think you you have a clear idea of what I said then you must have misunderstood me.” I want to say he won’t be missed but Mr. Bernanke could always screw up so badly that we pine for Uncle Allan so let’s not jinx it.
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Yahoo sat the day out, a bad sign with the upgrade but there is no reason to get out yet. If you are bored with the leap you can sell the $35 call for $1.05 for a quick 15% but it makes it a little complicated if the stock takes off on you.
EBAY was down all day and the $42.50 puts ended up at $1.65 for a 120% gain in just 8 hours!
I got out of the XOM calls for $2, more than double as soon as it turned down at 10am, as I often say, greed is not good and the options finished the day at $1.55. Often the early excitement of a strong day tends to overinflate option pricing and it is good to take advantage of that to sell at the top.
Speaking of greed, I didn’t sell my MSFT March $27.50s for $1 this afternoon (a 330% gain), not one. I hope I don’t end up hating myself but I’ve been waiting for this stock to move all year and I’m just not satisfied with a two day rally. The rule of thumb is take the profits at the 4 year high but I’m hoping to roll into a long-term position on this stock, I think this could be Microsoft’s year.
I do not consider it greedy that I flipped my CY position into the March $17.50 for .90, taking my Feb $15 profits off the table. The stock made a new high with little trouble this week and could go much higher. SPWR has been up all week, gaining 30% since last Wednesday. I believe that CY’s share of Sunpower is now worth more than their own company!
EK gave us the price we were looking for (.85 actually for the $25 call) and is already up 50% to $1.25.
BNI tacked on another 3%, not wanting to wait to hear how CP is doing!
HMC was down in the morning and jumped up in the afternoon. There is now a huge spread between bid and ask on the calls but we will just have to wait for earnings to see how this one turns out.
We called the top on PFE for sure as it dropped all day with a weak finish. I will buy back in if it hits the 200 dma of $25 as I think the fundamentals are really back on this one.
BSX gave up another 3% today. I don’t know what will stop this slide as the stock is now back at levels not seen since 2002 but if $21 doesn’t hold I’m not sure $20 will offer much support. This company is such a disaster that GDT is even going down – I bet that JNJ offer is starting to look a lot nicer to Guidant shareholders…
Speaking of bad companies – I forgot to buy LVS March $50 puts today! They went all the way down to $2.95 so I will really be looking for a top tomorrow to get in.
Here is an article on how great things are going for the Vegas casinos: http://yahoo.reuters.com/financeQuoteCompanyNewsArticle.jhtml?duid=mtfh99596_2006-01-11_19-09-10_n11390999_newsml Maybe for most but not for LVS and its p/e of 200! For the other casinos though, remember that 15% more winnings is pure profit for them. STN reports tomorrow, I will look into a play there in the morning.
I got a real treat (I hope) with the VLO $60 puts for just $1.50 at the end of the day, we’ll see in the morning just how crazy it is to bet against the company that makes the rule.
NAK apparently never heard of a pullback and drove up another 3% today! This may be my pick of the year by the time we’re done! MRB was not to be outdone and tacked on another 7% but looks exhausted after a 33% gain in 2 days.
TM bounced off its 50 dma of $102 early this morning and, with earnings coming up on the 7th, the $105 calls look very attractive at $1.80. I know a call is cheap when I own the stock (or the leap in this case) and I don’t want to sell the call against it, even $4 out of the money! Toyota earns as much money as Exxon (on more sales) but is priced at 1/2 of Exxon’s market cap. It is much more likely that oil will drop in price and scuttle profits than people are going to stop buying Camrys…
TWX looks ready to move if it can break the 50 dma of $17.75 where it was firmly rejected today. If it opens strong tomorrow the March $17s are way too cheap at .90 (a .35 premium). We all know something is up there but its moving at a glacial pace.
TXN has got to be at a bottom at $30. For goodness sakes the company gained 40% in earnings over last year which were up 50% from the prior year which were up 100% from the year before! Please buy this stock at these post crash 2001 prices! $30 is the 200 dma and looks like fairly a firm floor. As soon as we get an up move with strength I would call it an official buy but I’m going to buy 20% of my target in March $27.50s for $3 (a .45 premium) and see how the rest of the week goes.
JNJ will be a buy as soon as it’s done bottoming out. This stock is generally a slow mover so I’m not too worried about missing the boat.
We did not miss the boat by getting out of the NKE $85 puts last Monday as a day trade. At the time they shot up from $2.20 to $4.40 when the stock first dipped below $85. Now a week later, the option is trading for just $3.50 even though the stock has dipped another $3. The time value of options will kill you if you are greedy!!! Actually, I think they are too cheap right now and I may consider buying them again…
Those DCX $55 calls we picked up for .60 last Tuesday are now at $3. Earnings are not until 2/16 so I am going to take 40% off the table so I pocket 100% profit and let the rest ride with a $2.50 stop for a minimum profit so obscene I can’t even print it!
