Thursday Wrap-Up

Woopie! I don’t know why we are so excited but – yay! The Fed did exactly what we thought it would do and people were so relieved that everything that wasn’t nailed down got bought. On Monday I said we needed four things to rally: Funds need to salvage the quarter (they do – in fact CNBC featured this fact today) The Basel CB meeting needed to go quietly (it did) Tuesday Consumer confidence number needed to beat 103 (it did) Finally, Fed statement needed to give us something to make us believe they may pause (they did) So of course people are buying today. I was so surprised at the strength of the buying that I took a short position on the Dow though (sorry) right at the close because this seems like an overreaction to me and also because it partially covers the longs I let ride into the close (RHAT, HOV and MU). The S&P blew through 1,260 but time ran out before it could reach the 50 dma at 1,276. This is nothing to complain about but it will be an early test of the market’s resolve in the morning. The Dow also fell just short of testing 11,200 after the Fed sent it racing through 11,100 despite a failure there earlier in the day. The Nasdaq put in a 3% gain on a 4% SOX rally but we still have a lot of work to do there. So why did I short the Dow at the close? Some big tech like IBM and TXN hit profit taking at the close, I would have preferred to see buyers to the end. We are testing technicals in the morning so a pullback would not be surprising but I wanted to stay in my longs. It was another commodity led rally, only followed by the broad market for a change. Oil moved up $1.33 to $73.52 so you can see why the oil patch would get excited but how is this helping BA or the transports or DOW or DD? It amazes me when the things they point to as the cause of a drop are ignored like they don’t matter on a rebound. Gold pushed up to the $590 mark but was again rejected while copper pricing makes that PD deal look pretty smart. ===================================== It didn’t take a genius to pick winners today but the monkey was sick so I had to do it myself: I did say in comments that profits should be taken off the table, just in case and Apple is a good example of why as they are now the next company to report option expensing irregularities. AAPL had a great day but scary news in the AH which is fine if you sold the calls but bad if you’re naked long… The Jan $52.50s shot up to $11.30 (up 22%) but we will have to see what tomorrow brings. ABX Aug $30s are almost in the money at $1.15 (up 70%). AIR posted a 5% gain today and the Aug $22.50s doubled up to $1. AU Aug $50s are looking good at $1.60 (up 115%). Today’s play on the $45s did even better at $2.90 (up 120%). BTU made a nice comeback and the Aug $60s finished at $2.65 (up 40%). CAT had a heck of a day and the Aug $75s are already $2.80 (up 40%). COP had another huge day and the $65s are in the money at $2.35 (up 180%). Surprisingly you can still get .25 for the $60 puts so this spread is a huge winner. Like I said at the time, it is rare you get an opportunity like that! CWTR turned in a 5% gain and the $25s are just off the money at $1.05 (up 130%). It took the market a whole week to figure out what I said about EBAY on Tuesday, the Google product will not hurt Paypal! We are back to a .20 loss on the $30s at $1.15. GE $32.50s eased up to $1.10 (up 35%). GIS has been a slow mover and I still like the $50s at $1.90 (up 30%). GM found another round of suckers to bring the stock back to $27.50 – $29 is the magic number! HOV had a spectacular last 90 minutes and the $30s are in the money at $1.70 (up 55%). INTC $17.50s finished the day at $1.95(up 85%). KO $42.50s are still buyable at $1 (up 25%) if the market keeps moving. MCD was an early winner and the $32.50s are well in the money at $1.50 (up 200%). MLHR is our loser of the week with a 2% drop today which I just don’t get. The Aug $30s are down to .20 (down 60%). I didn’t love the earnings but everyone else did and MON ran up 9% today and the $80s finished well into the money at $4.50 (up 190%). MOT $20s renewed my faith at .75 (up 50%). MRB crawled back to $3.11, lagging the sector, still a good buy but I want to see gold break $600. MTU gave me deja vu as we again make a killing on the Novemeber $15s, now .90 (up 80%). NEM was only in-line with the miners but that was a 6% gain and the $50s flew up to $3.20 (up 135%). PALM gave horrific guidance but it looks like RIMM is just kicking their butts. Will this be good or bad for MOT? The PD spread is working well as the Jan $72.50s zoomed up to $16.40 (up $5) while the $82.50s moved up $1.30 to $3.80 for a net gain of $3.70 (up 32%). RHAT $22.50s came in early at $1 (see comments) and finished the day at $1.55 (up 55%). I need to be careful what I say in comments because those are getting picked up now (at least I wasn’t wrong!): http://software.seekingalpha.com/article/12757 TM got off to a slow start but leaped up with the Dow and the $100s are already in the money at $3.80. TXN gave us a nice entry on the $30s and, after a rocky start, finished just in the money at .90 (up 80%). I tried to sell mine pre-fed but no one would pay me .65 so I got stuck with them… Well I hope we have more days like this in store for us. It was getting kind of tedious waiting for something to happen!