What a crazy day that was!
The Dow was way up, almost 10,950, then back below 10,900 like it is no support at all. The S&P was worse, hitting 1,275 like a brick wall and bouncing back negative while the Nasdaq was beyond sad.
On a timing issue, it all sort of tied in to the 1pm 30 year note sale we talked about, even though the auction went very well, with rates ending up at just 4.53% (indicating huge demand). I suppose investors took this as a confirmation of a highly inverted yield curve renewing fears that the Fed has overdone it and trashed the economy. I see it as simply supply exceeding demand on a new issue.
I certainly hope my readers don’t wait for me to tell them to cash out their positions on a day like today! Especially with commodities staying low and oil heading further down, there was no reason for this kind of weakness.
Anyone who checked in on my 11am comment on the morning’s column should have made out like a bandit shorting oil again but, not being greedy, I cashed 1/2 out at 3:20 when XOM and VLO turned up. I may get back in tomorrow but, as we saw yesterday, the bounce backs can really kill you.
I sold my COP $60 puts and left 1/2 the profits on $55 puts (just .15 each) and I still have UPL $60 puts and XOM $57.50 puts but I will be very pleasantly surprised if they actually work out with so few days left.
Fridays are bad days to bet against oil as traders hate to go into the weekend without long positions in case something blows up. Again, I really think we have a long way to go down but only for day trades at the moment.
Gold was up but gold stocks chickened out mid day as we failed to get back over $570, still looks like it will break up to me.
====================================
I got out of the ADM trade because it made lots of money and it expires in a week. You should never really hold any option within 7 days of expiration as they deteriorate too fast. Unless, of course, you are buying it during that period for a short-term trade. If you like the position so much, roll it into the next month.
Google was very very good to me again but I took the money and ran at the close.
CHK was also a very good call in the comments today as we got in on the 10:30 gas build at $1.40 and out at $2.40 when VLO caused me to close at 3:20 – this is nice money for 5 hours!
WFMI was such a train wreck that I got stopped out with a double and could have made more! I was away today and put a stop in “just in case” and it hit before I got back. This was another intraday recommendation in yesterday’s comments which is the only place I can think to put things like that as otherwise this blog would be a mess.
IMCL started strong but died a horrible death, while GSK was strong all day.
EDS had a bad day in the end but the Jan ’08 calls gained 20% so you can see where the sentiment is.
You will get yet another shot at the BA $75s, up only .10 (15%) today.
Those NUE puts opened lower than we thought (.80) and ended up at $1.10, that should be enough of that.
TOTD X was a home run! It opened high and never gave us a lick of worry all day. The Jan $60 puts finished up at $10.90 (up 21%) and the March $55 puts finished at the same price. You can buy them back and take the profit and run but I know how it hurts to give back money. I will buy out 1/2 because I think the stock will go down further at this point as it was only held up by arbitrary resistance at $55.
INFY had a great day – I still haven’t gotten around to examining India as oil and Google have been too exciting this week.
PFE really came down hard this afternoon despite a PRU downgrade but it still looks OK. I think there was so much going on nobody read the report: http://www.forbes.com/2006/02/09/Pfizer-forest-laboratories-0209markets09.html?partner=yahootix
Today was that day with SNDK. It went straight down on volume and it may be a momentum play for us tomorrow.
CSCO really teased up today but couldn’t break that 20.25 number. The March $20s have already doubled but are still in line with where we want them. Today’s chart is exactly the reason I want to see a confirmed breakout: http://finance.yahoo.com/q/bc?s=CSCO&t=1d&l=on&z=m&q=l&c=
DOW had a very nice day as well. The Mar $40s finished at $2.20, up 30% but I wish I had been around to take the 50% profit this morning!
MCD did not go down today and you have to be proud of them after such a nice run.
BHI Mar $75 puts are up $1.80 (36%) and again I expect 5% trailing stocks once you get to 20% in this market!!! Greed is not good!
Oprah is getting $55M over 3 years for 1/2 hour per week and XM’s stock shoots up 5%. Howard Stern is getting $100M per year for 16 hours per week (plus 2 full channels of 24 hour programming) and people say that is overpaying – go figure…
