What a disaster!
The worst thing is there was no actual reason for it. The sell-off started because there was a rumor floating that the terror alert level was being raised but, even after it was determined to be false, no one wanted to buy anything back.
But:
Gold was flat – indicating no particular international tensions
Oil was down – indicating the Iran crisis is fading
Bonds were flat – indicating money is waiting to come in to the markets
There is a fear of a big employment number that is dominating the markets. Jobs up more than 275,000 will be a big problem in the morning. I will be on the way to Vermont with my cash because I took my own advice this morning and got out although I did take small chunks of the stocks I mentioned earlier (20% of my goal) and decided not to sell them as I really think/hope tomorrow will give us a Nikkei style comeback.
I said a couple of days ago that we are just about hitting peak fear in the markets. Maybe one more day and then, when everyone wakes up Monday to find the world intact, we should shake this off and get back to our rally.
The most important thing, the thing you need to watch is this chart:
http://stockcharts.com/gallery/?$SPX
We are still moving right along an uptrending 50 dma and, although we may trade flat for a few days, we are in no real danger unless the S&P stays below 1,270 tomorrow. You can see how on last Wednesday, the index went below the line all the way to 1,259.42 BUT IT DID NOT FINISH BELOW THE LINE. That is critical. That bottom test led to a fabulous Thursday and Friday last week. Read down to Wednesday the 25th or better yet start at Friday the 20th when we lost 200 Dow points in one day (and that was below the 50 dma but the Dow is a terrible indicator).
We did not have the sort of massive sell-off we needed to really clear out all the fraidy cats so we will have to wait until tomorrow or perhaps Monday to recommit.
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Amazon is out with what looks like disastrous earnings but actually are quite good because the quarter they are being compared to had a one-time gain that didn’t happen this quarter (because it was a one-time gain. I’m sorry I have to explain this but many analysts read this column and they are just not very smart). They are raising guidance as the stock drops to $38 in the after market so I wish I could jump in right now!
AAPL crossed below the 50 dma and the 200 dma is way down at $52. It would have to cross back over $75 before I would put anything into it.
GOOG finally made a down move right about 3:30, I got out of my calls even and now I am fully loaded with puts so this will be very exciting!
It was FORMER AIG execs that were indicted so that is no longer a good trade. In fact, it might be a buy now.
I will be dumbfounded if gold stays at $375 and gold stocks stay down… GG was up a touch for the day and BVN ended flat after a scary open. ABX and NAB were nightmares all day while MRB was up 2.4% (go figure).
I took a position in a new copper stock today – TGB. They are a Canadian miner with a tiny little $185M market cap and they are just ramping up production to the tune of $30M per quarter on which they are earning close to .20 per share. That works out to earnings of .80 per year (and growing fast) for a stock that costs $1.80!
I should have picked PCU instead of PD this afternoon! Better yet I should have waited but I really do think we might pop back tomorrow.
UNH recovered nicely this afternoon as did PFE, CME and BUD. I am excited about my EK calls and I picked up GM for purely technical reasons (getting out at 20%).
Cramer says HXL is as good as ATI. If they can keep up last quarter’s earnings he might be right but they have been uneven at best. I will add it to my watch list.
The SUN $90 calls I picked up midday for $1.70 are already up 15% but the XOM $62.50 puts dropped 7% so I have to hope for a nice move one way or the other tomorrow. Our SUN $90 put finished at $4.40 but was much higher if you got out when I posted or followed the Valero Rule later in the afternoon.
The SU puts were also a huge winner and also dropped a lot from their peak if you broke the Rule!
Speaking of breaking rules – I did not sell first thing (like I said we should) or raise my stop on the remaining DCX $55 calls which we picked up for .60 even though they were at $3.75 this morning and it cost me .75, back to where we were Monday when we halfed out.
RIMM only had a bad day compared to yesterday’s $5 gain. It amazes me how much the mornings drop paniced the call holders. If you looked at this chart, would you be selling?
http://finance.yahoo.com/q/bc?s=RIMM&t=5d
OEH held firm today, that makes me want it more! There are no options so you have to have real faith in the earnings. BYD actually went up .5% today, I really like that one… HET held it’s own as well.
I took the SBUX calls off the table for $2.10 in the afternoon after getting .25 for the puts this morning. 400% on this one wiped out all the losses I had for the day!
BA was strong all day so I really like the super cheap $75 calls for a gamble at .25 as well as the Mar $70s for $3 (a $1.30 premium). The March calls are a much better deal – 1/3 the premium, 3x the time so when I say gamble I really mean it!
TWX did exactly what we expected it to do today, pulled back to $18.10 and finished right back where it started.
Taking the money on GENZ was a brilliant call this morning! Thank goodness I am getting to know this stock so well: http://finance.yahoo.com/q/bc?s=GENZ&t=1d
IBM dropped .71 but the March $85 calls only lost .20 so that should tell you something. If the market heads up, this is one of the best values there.
LVS went down $2 then back up. I sold $50 puts on 1/2 my position for $2 to cover myself but the April $50 puts actually went up in price to $4.40, so I made out on both ends.
VOLVY shot up today. The July $45s are already up to $5.80 for a 15% gain in 2 days!
TEN held up nicely, and today may have been as much of a pullback as we are going to see. I still like the $20 calls for $2.
You will get one last chance at HMC tomorrow before it runs to $30. The Mar $30s are just .65 – still a deal (but double what we paid on Monday)!
BSX held up well today, they may have actually found a bottom!
