Boy that was ugly!
As expected, it was a total breakdown led by oil but commodities surprisingly chipped in as gold dropped $12 to $557 and oil dropped below $62 (but was pumped up just above at the close).
That drop was over relief on the Iran crisis and OPEC making nice noises regarding supply. Interest rates kept a lid on things along with some poor manufacturing numbers but really – you couldn’t have much better circumstances for a rally and there was nothing!
On the bright side, we never tested the upper bands – believe it or not that’s better than a rejection off the top! It looked like money rotated out of oil and commodities into nothing (maybe cash like I did) and on a big merger day like today, that is a very negative sign.
The Amex and NYSE did give the early signal to get out by 11:30, dropping a little faster than the rest:
http://finance.yahoo.com/q/bc?t=1d&s=%5ENYA&l=on&z=m&q=l&c=&c=%5EGSPC&c=%5EIXIC&c=%5EDJI
Contrary to my own advice, I ended up holding some oil puts overnight as they were so in the money, the worst I am likely to do is end up even and, as usual, the only reason oil remained above the critical line ($62) is that it was manipulated in the last few minutes.
CNBC is into week two of touting India (my market pick for 2006 way back on 1/1). Well, anything must be better than this market right? TOPIX is the name of the big Indian index fund.
You shouldn’t have really bought anything today other than oil puts so I’m not going to waste too much time on old picks…
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Much to my chagrin, RIMM never did come down. I have the $80 puts for about $1.50 and I really hope people come to their senses tomorrow.
WYNN is another one I took but this one is going well as I came in right at the top. If this one pulls in it will pay for a trip to Vegas (or Macau for that matter) as I have the $70 puts for .70, now $1 (up 40% so far).
LGF held up well in this terrible market, holding up for a 2% gain. I still like this for a buy and hold (not that I like anything in this market).
BIIB held up very well today after giving us a nice cheap open.
AAPL is just melting down completely, PLAY for some reason went up 2% – I am as baffled as you are, but not so baffled that I didn’t double down on my May $27.50s for $1.20.
BTU was a great selection, giving us no trouble all day and the Apr $50 puts ended at $3.80 (up 30%). VLO did give us a clear sell signal at about 1:30 but I was so far ahead I ignored it (greed is bad!).
CHK also tracked straight down all morning with the $32.50 puts jumping to $2.40 for a very nice 85% gain!
OII was another good one that even had a weak finish. The Apr $55 puts run up to $3.10 for a 40% gain.
SU dropped 3% for the day with a very weak finish. The $75 puts almost doubled to $1.90 and this stock is still way above the 50 dma of $72.50!
TSO was a real train wreck, losing 3.6% on the day and the $65 puts wound up at $5.20 for a 50% gain.
HAL and SLB both lost 4% today, easy doubles on the puts!
GE held up well today.
CSCO tried really hard to fight the market all day but gave up at 1:30 and wound up flat for the day. This is a very strong stock considering:
http://finance.yahoo.com/q/bc?s=CSCO&t=1d
BVN and NEM dropped 5% each on a 2% drop in gold. Always remember how volatile these gold stocks can be!
I don’t know if I can say COF was a great call as everyone had a bad day today but they did drop a point and the Jun $85 puts ended up at 2.45 (up 20%) so that was at least a great entry.
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GG was up 1/2% on good earnings but I don’t know if it can survive $550 gold! You know I love this one and they did not disappoint with triple profits on double revenues (gotta love it!) and seriously revised guidance to the upside.
“With the expected acquisition of Placer’s assets combined with organic growth, Goldcorp will remain the fastest growing, lowest cost multimillion ounce gold producer, with production expected to double from 2005 to 2007,” Chief Executive Ian Telfer said in a statement.
Goldcorp said it had proven and probable gold reserves of 14.7 million ounces at the end of 2005, up nearly three-fold from 2004. On a pro forma basis, including the Placer assets, proven and probable gold reserves were 25.3 million ounces – worth about $14Bn for a company with a $9.5Bn market cap!
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Well, I really have no idea here… This thing could still go either way. I love my cash, I love my cash – that needs to be your mantra in this type of market. You must love your cash so much that you hate to give it to a stock and, if you do, you must want to take it back as soon as possible – buy and hold is for suckers in this market!
I keep looking at short plays but my heart just isn’t in it yet. Feel free to send in suggestions (anything you think is way overpriced) because after TXN’s disappointing guidance I am deeply concerned overall. It is doubtful that INTC and MSFT will save us at Intel’s analyst day tomorrow.
This makes 3 down days in a row but only 100 pts of Dow damage, but 200 in 2 weeks from the high. Tomorrow we get to test the 50 dma at 10,900 and woe unto us if we break through that!
Sleep well,
– Phil
