Testy Tuesday Wrap-Up

In the comments we were discussing whether or not this was an ugly day. The bottom line is that we had a fairly mild pullback off multi-year highs. After 6 up sessions and one flat from 10,970 to 11,300 the Dow pulled back 40 points today. The S&P took a more alarming turn under 1,300 but you can’t fall too in love with those whole numbers as it is still sitting just above its prior turning points of 1,294 and 1,297 in its last 2 runs at 1,300. The Nasdaq is still the biggest concern and looks like it will test the 50 dma at 2,285 before it can get serious about moving up. Oil rebounded sharply after drifting below $60 in the morning but there was clearly no downtrend in Valero, XOM which generally trended up into a very nice spike at 12:10 when it would have been a great time to hit the shorts! http://finance.yahoo.com/q/bc?s=VLO&t=1d The last time there was this much oil stockpiled in the US was 7 years ago when the POO was on its way down from $40 to the low $20s. Assuming we have 5% annual inflation over that time you could say oil is actually worth about $45 or less and everything else is a pure fear premium. This was not a day to be greedy and this is not a time in the market to be greedy. If you can’t watch a trade, at least put in a sell order at a 20% profit. If we are going back to last year’s rangy trading, the longer you hold a stock the worse you returns will be! Google is remaining in its $340 to $350 channel but there was an intense battle to hold $340 at the end of the day that may have been lost by whoever was trying to support it. Expect it to be bid back up a few dollars in the after hours so they can start the cycle again in the morning. You can thank Congress, not the President, for the worst news of the day which is Dubai, in what looks like payback for the port debacle, holding off on a $1.2Bn purchase of a military equipment maker. This is not good, we “import” $4Bn every day to finance our massive deficit and a good portion of that comes in the form of deals like this. This plus the $6.8Bn port deal makes $8Bn we blew off this month. If this kind of retaliation spreads, it will take a lot more than interest rate hikes to attract the kind of money are addicted to worse than oil! ===================================== Most oil was flat today but for some reason SU thought it was rally time so I now really, really like the $70 puts for $1.60 but this is still subject to Valero Rule as well as waiting for inventory tomorrow at 10:30 to make sure we get a 3M barrel build. DELL was a great don’t be greedy example today. The $30 calls opened at .60 and traded up to $1.20 around noon (up 100%) before coming down with the markets to settle at .85 (up 35%). I can lead a horse to water but I can’t force him to take huge profits off the table…. GLW lost 2.5% so perhaps I am the only believer and the May $30s lost .15 (down 15%). MUR is another huge one to watch tomorrow as the Power of Cramer (and a LEH upgrade) propelled the stock up 2.3% today and the $45 puts down to .75. CHK has no hope at all and lost 1.2% and BTU paired down with them for a 2% loss. Both of these stocks were actually up 3% mid day! SLB is still paired with HAL so no longer a good trade no matter what. BA was another don’t be greedy example again! If you were “stuck” with it last night like I was, you were thrilled this morning when it opened up .90 for no reason. So our little $1 options opened at $1.45, quickly fell to $1.20 (still up 20%) and then rebounded to $1.45 around 12:30. You don’t have to burn me 3 times to make me smart (2 usually does it) and I got out with a 40% profit. HTYM looks strong, up .20 (3%) in 2 days to $7.20. Monday’s QQQQ $41s got very exciting around mid-day and held $1.40-1.45 for a while (up 25%) then went to $1.35 at 1pm, $1.25 at 2pm and $1.10 at 2:30pm. TAKE PROFITS, SET STOPS!!! http://finance.yahoo.com/q/bc?s=QQQQ&t=1d ===================================== NKE profits and revenues were up nicely with a double beat and the stock is going down. This does not bode well for the markets tomorrow!