Now you see why I was bearish in the morning!
It wasn't just me that didn't like the CPI numbers, it just took everyone else 4 hours to come to the same conclusion…
Despite staying "low," the fantasy land (core) CPI has still been climbing 0.1% per month for 4 consecutive months. Key components that kept down the CPI this month were rent, transportation and apparel – all signs of a slowing economy. A lot of weight will be given to productivity numbers and we get industrial production tomorrow along with capacity utilization, which has been low (81.5%). What's really scary is when you look at flat retail sales and adjust them for non-existent inflation – then it looks like 2 consecutive months of decline.
Kudos to ME for keeping everyone on track yesterday. Part of going with the flow is watching which way the flow goes: At 10:07,with the Dow at 13,420 I said: "Lots of old leaders making a strong comeback, we could break out here." Although we grabbed a few fun calls in the morning, at 11:07 I called for a tightening up of our protective DIA puts and we killed our QQQQ calls despite the "rally." Just 15 minutes later, even though it was heading up. At 11:24 I said: "S&P could not hold 1,510 again – not good. – Fundamentally I thought the CPI was bad and tomorrow we get housing starts pre-market along with industrial production and cap utilization. IP was awful last month and we know builders are hurting so I’m really looking at today as an opportunity to lighten up. If the Dow goes up from here it has to break my 13,500 target soon and I’ll be happy to get back in then but I’m keeping 20% of the profit stops on all uncovered calls."
At 11:43, with the Dow punching through to a new high I decided I really didn't like the underlying market action: "I’m not the only guy who’s seeing this rally as a good time to cash out, that’s putting weight on a lot of strong performers. I think I said at the beginning of the month, most fund managers have already had a great year so this is more about protecting profits while not wanting to miss out if there’s more to be had." At 12:14 I called the top 9 points and 30 minutes early saying: "I was looking for 13,500 on this rally which is why I am getting so nervous at 13,462."
Our Trade of the Day Award, however, goes to Dday97 who made a better move than I did on SHFL when I called that stock at 9:54. I was being cautious and went with the Aug $17.50s at $1.30, which gained a respectable 100% for the day, but Dday came up with the June $17.50s, which were .50 at the time and had a much slower start but rose to $2.20 by the afternoon on a really wild day for that stock. Congrats to DDay and all the members who got in that trade!
An optimist would say the Dow gained 37 points but a realist would say LOL to that as we got a pretty stiff rejection of critical levels on the Dow (13,450), the S&P (1,515) and the Nasdaq (2,550):
|
|
|
Day’s |
Must |
Comfort |
Break |
Next |
|
Index |
Current |
Move |
Hold |
Zone |
Out |
Goal |
| Dow | 13,383 | 20 | 12,468 | 12,600 | 13,000 | 13,500 |
| Transports | 2,870 | 3 | 2,825 | 2,900 | 3,000 | 3,250 |
| S&P | 1,501 | -2 | 1,430 | 1,460 | 1,500 | 1,550 |
| NYSE | 9,764 | -1 | 9,218 | 9,465 | 9,600 | 10,000 |
| Nasdaq | 2,525 | -21 | 2,454 | 2,500 | 2,600 | 2,750 |
| SOX | 498 | -1 | 477 | 490 | 500 | 560 |
| Russell | 814 | -8 | 803 | 820 | 850 | 900 |
I had to add a red box to the Russell and the SOX and the Nasdaq is barely holding 2,500 and will be our index of the day tomorrow. Google has been no help at all in providing leadership and Apple was attacked by profit takers in the afternoon. I'm still hanging my hat on better news from semi makers as well as a good report from CDWC which everyone seemed to ignore but I think indicates corporate spending is much stronger than people think.
While one can always hope, a pragmatist sits on cash and we cashed out a lot of contracts into this rally as we tightened our stops in the afternoon as we continued to weed out weakening positions:
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|
|
|
|
|
Price |
Price |
Date |
|
Profit |
|
Symbol |
|
Strike |
Type |
Date |
Qty |
Paid |
Sold |
Sold |
Prof/Loss |
% |
| AAPL | J | $ 105 | C | 5/10 | 10 | $ 6.25 | $ 6.25 | 5/15 | $ – | 0% |
| AAPL | J | $ 95 | C | 4/23 | 20 | $9.15 | $ 15.50 | 5/15 | $ 6.35 | 69% |
| AMGN | J | $ 58 | P | 5/10 | 50 | $1.05 | $ 4.80 | 5/15 | $ 3.75 | 357% |
| CAT | M | $ 75 | C | 5/10 | -20 | $0.50 | $ 1.00 | 5/14 | $ 0.50 | -100% |
| CSCO | M | $ 25 | P | 4/30 | 15 | $ 0.05 | $ 0.05 | 5/15 | $ – | 0% |
| DIA | M | $ 132 | C | 5/10 | -40 | $1.30 | $ 1.70 | 5/14 | $ 0.40 | -31% |
| DIA | J | $ 134 | C | 5/10 | 40 | $2.30 | $ 3.52 | 5/15 | $ 1.22 | 53% |
| DNDN | J | $ 5 | C | 5/9 | 75 | $0.20 | $ 1.20 | 5/15 | $ 1.00 | 500% |
| GOOG | M | $ 480 | P | 5/4 | -30 | $12.00 | $ 14.60 | 5/14 | $ 2.60 | -22% |
| GOOG | M | $ 470 | P | 5/10 | -30 | $9.00 | $ 6.50 | 5/14 | $ (2.50) | 28% |
| GOOG | M | $ 460 | P | 5/14 | -30 | $4.00 | $ 3.00 | 5/15 | $ (1.00) | 25% |
| JBX | M | $ 75 | C | 5/14 | -20 | $2.50 | $ 1.50 | 5/15 | $ (1.00) | 40% |
| MEE | M | $ 30 | P | 5/14 | -20 | $3.20 | $ 2.30 | 5/14 | $ (0.90) | 28% |
| MSFT | J | $ 33 | C | 5/4 | 50 | $0.35 | $ 0.47 | 5/15 | $ 0.12 | 34% |
| ONXX | J | $ 35 | C | 5/11 | 40 | $0.75 | $ 1.65 | 5/15 | $ 0.90 | 120% |
| QQQQ | M | $ 46 | C | 5/14 | 200 | $0.55 | $ 0.80 | 5/14 | $ 0.25 | 45% |
| SLB | J | $ 75 | C | 5/11 | 25 | $2.00 | $ 3.50 | 5/15 | $ 1.50 | 75% |
| T | J | $ 40 | C | 4/25 | 45 | $0.63 | $ 1.25 | 5/15 | $ 0.62 | 98% |
| TXN | J | $ 38 | C | 4/25 | 50 | $0.36 | $ 0.95 | 5/15 | $ 0.59 | 164% |
| YHOO | O | $ 35 | C | 5/4 | 300 | $1.00 | $ 0.80 | 5/15 | $ (0.20) | -20% |
