What a great move today!
I’m having a lot of trouble worrying with these numbers but the Nasdaq still has a lot of internal weakness, the Semis were down 1.5% on poor outlook (again) but the Dow and S&P were strong all around. Perhaps we are going to have an old school techless rally but I will be very surprised.
Word is that investment money is moving out of housing and into the markets. The rally in builders is reflective of people who still like real estate but don’t want their money tied up in a home.
The Dow did very, very well considering GM was down 5%!
Nonetheless we are in great shape for Monday and best of all, I’ve adjusted and have picked out a good percentage of winners again!
Oil stayed high at $62.82 and even BTU moved up a little today but XOM and VLO went down so who knows what’s going on there…
The dollar is weakening against the Euro accounting for $1.20 of oil’s gain this week but gold remains at $554 so fear cannot be much of a factor in the pricing. At this point we would like to see oil retest highs so we can short it when it fails.
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Tempting as it was to stay in, I stuck to my guns and went 85% cash. DNA announced a huge forecast at a conference which I was able to take advantage of so I’m a very happy camper! Opportunities like that are amazing, CNBC says earning up 50% for the next two years and I have cash in my account, what could be better?!?
http://finance.yahoo.com/q/bc?s=DNA&t=1d
Google continues to attract more and more retail investors (who heard it was good last year) as more and more funds sell it. More on that this weekend. Today it was held up by Citibank who kept earnings targets basically flat (we will villify them later!).
PD had a great day, up 4% with the Apr $75s moving to $3.50 (up 15%). D’oh, on Monday we almost bought the Apr $65s for $2 but it didn’t execute! (kick, kick, kick)
CY held up well for a semi. AAPL and PLAY were both fairly flat but I really think both were held down for options.
We should have played AIG as a sounds worse than it really is play, it made a great recovery from its low.
http://finance.yahoo.com/q/bc?t=1d&l=on&z=m&q=l&p=&a=&c=&s=aig
Speaking of recoveries, TOTD SHLD took a little bounce off of $134 but there were two different opportunities to cash out for $1 (a 300% profit). Now that’s what I call a trade of the day!
Thursday TOTD MOT made another .5% but we have the Julys so we need to relax there. Most importantly the stock flipped over the 50 dma today and held it.
http://stockcharts.com/gallery/?mot
BA tacked on another 1.5% and the support stocks were dragging a bit so we might get an opportunity there next week.
TIE had a bad day, down 2.5%, this one I’m sure was expiration driven as ATI was up 1.6% and earnings were solid. The Sept $40s held up at $8.50 while the Apr $45s we sold went down to $1.90 so we are up .10 so far. On this trade we want to pull back so we can buy out the calls and resell at a higher price.
LVS tried to get away but settled back at about the secondary pricing at $50.50, I knew we should have taken that one! (kick, kick)
http://finance.yahoo.com/q/bc?s=LVS&t=5d
PALM gained 2% today, putting the April $20s in the money at $1.70, just what we sold them for! I still expect a pullback to around $19 before the stock flys which should give us a chance to buy out the caller.
DCX Apri $60s dropped to .50 (down 40%) but I think it was an expiration thing. I would want to buy some more if it holds the 50 dma at $56 next week.
I have to look at GS now that it crossed $150 as it may be shortable now. The rest of the brokers did well too but were not rewarded.
http://finance.yahoo.com/q/bc?t=5d&s=GS&l=on&z=m&q=l&c=mer+bsc+leh
Someone mentioned ELOS in the comments but I forgot about them today which sucks because they gained 2.5%. Don’t let me forget again!
ESLR went down 11% today on what I can only believe was pure manipulation. This is why we set stops though but I’m buying back in if it holds the 50 dma at $14.50 or maintains the solid bounce (huge volume) it took today off $15.
You didn’t miss much if you didn’t get MSFT yet, the Oct $27.50s are just $1.65 (up 10%).
MER Jul $80 puts finished the week at $4.20 (up 100%). Set a very tight stop on this one and maybe half out before earnings in April.
BRKA went nowhere this week, down $1.5% as the rest of the market was too exciting and investors sold the expensive shares to free up cash. This is logical because Berkshire is not a jumping stock and you can always reenter.
BRKA holding and 1/20 TOTD BUD finished the week at $43.50 and the Jan ’08 $45s ran up to $4.40 (up 20%). This is a huge move for this blue chip! It is now resting just above the 200 dma of $43.25 so next week will be key.
MCD rewarded the patient and the Jun $35s are $1.70 (up 20%).
PGIC finally moved up, ending the week at $7.87 (up 5%).
http://finance.yahoo.com/q/bc?t=5d&l=on&z=m&q=l&p=&a=&c=&s=pgic
After a very rough week, the PLAY Apr $22.50s only lost 10%, finishing at $2.10.
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The Google Spread
Well, we got out of spread # 2 with a $6.60 profit on the calls and a $3 loss on the short position for $3.60 for the week (1%), not terrible for a trade that didn’t work…
Spread # 1 is stil working with the stock down $2 for the week while the Jun $330 puts finished at $21. I screwed up the math in an earlier post so I’ll redo here:
We picked up the stock on Tuesday at $337 and it finished today at $340 (up $3)
We picked up 1.5 Jun $330 puts for $24 on very bad timing.
On Wednesday we added $14 worth of puts @ $18.50 (say .75)
The stock finished at $340 (up $3) while the puts finished at $21 (a loss of $4.50 per share on the first batch and a gain of $1.25 per share on the second) for a total loss of $3.25 so far.
Don’t forget we are happpy to be evenish because we are playing this for a big move in either direction but leaning towards an earnings dive so what we really accomplished was picking up additional puts at their low of the week.
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Thursday’s bonus spread of the $350 call and the $340 put for $2.70 each paid off at $6 on the put this morning but was wiped out if you were greedy.
The rule with a channel spread like this is to take whichever put doubles first and ride the other one out for whatever profit you get. This trade should have netted $2 but you do have to watch it all day!
Have a good weekend,
– Phil
