Well we got our gains but they weren’t very strong although there was a nice rally right at the end, reversing an afternoon sell-off.
Maybe it’s my sunny disposition but I think we’re going up. I’m not willing to bet we’re going up but I will be quick to get on board if we do. Looking at the Dow, I think we may bob around the 11,100 line for maybe a week and then head back north. I was very encouraged this morning when oil was down and the indexes were up but disappointed at the afternoon’s reversal of leadership. It was pointed out to me however that it is the end of the month and the 2% rise in the energy sector may have been attributable to “window dressing” by funds who were heavy into oil – we will see tomorrow.
The Dow must not go below 11,000 and the S&P must not go below 1,250 but I expect the S&P to have some respect for its 200 dma at 1,258 while the Nasdaq needs to stay above 2,150 until it can make it back over its 200 at 2,230.
If we can make it through next week without dropping below my targets, by Thursday I will want to start shopping so let’s hope for the best.
Rice made a podium statement regarding Iran and had a very strange tone in the opening that reversed at the end. I don’t know who wrote it but it didn’t seem like good diplomacy to me:
http://online.wsj.com/article/SB114908908594267546.html?mod=home_whats_news_us
Oil traded down .75 for the day to $71.30 but the oil stocks reversed around 1pm in a move that was indicated by Valero at noon. Essentially the initial reaction to Rice’s speech was bearish for oil but after talking it over the traders decided to keep the Iran fear factor in play.
Gold traders were very concerned about a sudden outbreak of peace and gold dropped $11 to finish at $649. As you can see below, the fear factor was almost identical to oil as the Iran statement came out at 11:30 with both commodities dropping 2% and holding there until oil was pumped up in the afternoon and gold followed just a bit in case something was really up:
http://finance.yahoo.com/q/bc?t=1d&s=GLD&l=on&z=m&q=l&c=uso
Another 2pm factor were the FMOC minutes which only seemed to cloud the issue of rate hikes further. At first the Dow jumped up, then it sold off, then it jumped up again, drifted down and finally decided the news was good (and we are still not sure what the news is):
http://finance.yahoo.com/q/bc?s=%5EDJI&t=1d
Its all up to the pundits now. The way the Iran situation spins out tonight will have a significant effect on the markets tomorrow. I’m still in cash outside of a couple of oil puts that don’t look so hot at the moment and yes, I know, had I obeyed the Valero Rule I could have taken a small profit and gotten out but I was greedy and I am suffering for it!
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The oil puts were a no play and I apologize that I did not know they moved the inventory to tomorrow. I still like the following for all the same reasons but again, following the Valero Rule to the letter will save you from making mistakes!
Tomorrow we will be looking for oil to drop below $71 and builds in inventory of over 1M in all categories to trigger the trades.
MDR (1/31=$52.50) $60 puts for .60 – no change
BHI (1/31=$78) $85 puts for $1.95 – was $90 puts, BHI rose 3%
BTU (1/31=$50) $60 puts for $1.65 – was $57.50s, stock gained $2
CNX (1/31=$72.50) $85 puts for $1.85 – was $80 puts, gained 3%
IMO (1/31=$35) $36.73 puts for .95 – these actually went up .20 today!
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TIF had very nice earning and I loved this quote in their statement: “Sharply higher precious metal and diamond costs continue to pressure gross margin, although the company periodically adjusts retail prices to mitigate such effects.” Yes, they adjusted earnings up 7.7% so pay up suckers! The stock flew up 5% and the Jul $35s hit $1 (up 80%) – so now we can afford a little something from the store!
VOD moved today and the $22.50s finished at .80 (up 25%).
GRMN has a poor start, dropping below $92.50 but made a nice comeback with the $100s up a nickle at .75 but I don’t trust them based on today’s moves.
http://finance.yahoo.com/q/bc?s=GRMN&t=1d
CWTR was a good call, gaining 7% on the day but I was too cheap to chase it and now the Jul $22.50s are $3.90 (up 33%). At this point I will just hope it comes down or just forget about it.
GOOG had a rough day and the $410s dropped down to $1.70 (down 35%), mainly from a general drop in premiums after an uneventful conference call. The $350 puts gained $2 to finish the day at $4.50 (up 80%) so the range is right, we just have to hope we get the bounce we expected.
Microsoft also got hammered today as Steve Balmer failed to impress with his plans, the stock lost 2% to finish at $22.65.
Apple continued its break down today and dropped another 2% to $59.77, just $2 away from my target of $57.50.
