Every time I try to get out – they pull me back in! I tried to cash out yesterday, really I did but the darn market just keeps going up! Well, we gotta go with the flow at times like this and just keep raising our stops, although it seems odd to have to set a stop at 220% doesn’t it? Did we break our technicals?
- Dow Jones 11,600 – Check!
- S&P 1,325 – Check!
- NYSE 8,400 – Oops, 8,391 with a brief trip above 8,400
- Nasdaq 2,250 – Check
3 out of 4 and the one miss was on a 45 point gain for the day – not bad! We need to watch out for breakdowns tomorrow and we will be looking for the NYSE to lead the way. Last night I said that the transports did not worry me and here’s why: http://stockcharts.com/gallery/?%24tranq While it would have been nice for them to break 2,500, we’ll make due with a 1.3% gain on the day. The SOX put on a subdued performance but did close above 460 so we have nothing to complain about. Unless of course you are an oil bull, in which case I don’t know why you come to this site as you get little affirmation here. The oil chart is downright ugly and we are not expecting any relief in tomorrows natural gas report, where another 90Bcf injection is expected. Gold is also looking bearish but not the crash and burn sort of bearish we have in the oil patch. It held $580 today and may make a consolidating move unless traders decide the economy is cooling on a global basis (and CAT traders seem to think so). The news of the day was, of course the Fed, which left rates the same and followed my speech to the letter (see comments) saying they see moderate growth, “cooling” housing, rising wages with price pressure abated by falling energy prices. They move on to say that they remain ever vigilant (which sent gold to the day’s low after the release) and Jeff Lacker continues to dissent and call for an increase of .25, a good move to show people they are serious about containing inflation.
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We’ll just focus on our new trades today, no sense rehashing the whole thing every day – that’s what the archives are for!
TM is up a point and the Nov $110s jumped to $2.90 (up 15%) and the Jan $115s hit $3 (up 20%). GS had a perfect day for our purposes as the stock rose $1.81 from the open and the Nov $160 puts dropped down to $3.30 (up .20%) offsetting half the loss. GCI took off like a rocket on our first day with it (remember what I said about trading into fresh horses) and the Jan $60s ended at $1 (up 20%) while the Jan $65s came in at just .20. Our spread play collected $2.95 for the Jan $55s (down .15) against our Jan ’08 $55s for $6.70 (up .30). Obviously, this is a long-term play – it was just a coincidence that it gained 2% today. It looks like we picked the right day to short RAI as the Nov $62.50 puts flew up to $2.80 (up 115%) but the gap down made it hard to reach: http://finance.yahoo.com/charts#chart1:symbol=rai;range=1d;indicator=stochasticslow+volumema(5);charttype=candlestick;crosshair=on;logscale=off;source= We also made a nice entry on COF, which opened nicely and flew up 2.5% for the day. The $80s doubled to $1.20 and the Dec $80s finished up 35% to $2.80. Remember they are facing a test of the 50 dma so, silly as it is after just one day, set tight stops – we have all the time in the world to reenter…
http://stockcharts.com/gallery/?cof AFL was another perfect entry (quite a day!) gathering strength and exploding up on the Fed news. The $45s are already in the money at $1.30 (up 115%). HRB was a relative turkey, gaining just half a point on the day. The Apr $22.50s finished up a nickel at $1.60. We had builder weakness all day so no trigger on HD and LOW but I will be watching for an entry on both of these. Needless to say our oil plays did very well! In addition to the usual suspects, in comments we grabbed” XOM $65 puts for $1.20, which finished at $1.95 (up 60%) SLB $55 put for $1.10, which finished at $1.95 (up 75%). I sold mine because I won’t be around tomorrow to watch them. From yesterday’s comments we sold: SPY $135s for .60 (up 50%). QQQQ $41s for .60 (up 50%) DIA $117s for $1 (up 33%). These are not bad for day trades! Hope your day was a good one too – we will wrap up the other 60 trades on Friday or as necessary.
