"…it doesn’t necessarily mean that being bearish is suddenly more profitable!" – Phil Davis
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The stock market was in a very cheerful mood today! CSCO’s earnings seems to have inspired buyers to come back in. CSCO shares went up +6.7%, comparing to yesterday’s AH gain of +5.73%. I also mentioned PCLN yesterday with an AH rise of +10%, and it closed up more than +22%!! Things were simply on fire today! Right from the open, the investors/traders must have felt like they are chasing a runaway train! Nasdaq gained more than +60 points at one time, closing up +51.38! SPX closed just under 1500. The Dow made it almost to 13700!
I’m going to continue the theme that I started yesterday, comparing VIX to SPX. Yesterday, I pointed out that the support levels of SPX seem to be pretty strong and VIX has gotten too high. Together, these indicators signaled a market bounce for me! And, look what happened today! I can’t take all the credit though. There were simply too many shorts in the market. With a bellweather company like CSCO delivering positive news, the bulls used it as an excuse to give the shorts a hard squeeze! Of course, from my perspective, the “technicals” supported that move!
SPX
SPX pierced through 1500 at one point, but, closed just under it. Its MACD continues to rise. We’ve been talking about the support levels, which I had set them at 1440-1460. Now, I’m looking at some near-term “resistance” levels. Since SPX did go above 1500, I’m seeing 1500-1520. This is the range that I’ll be looking for SPX to go above to feel more comfortable that the market has completed a healthy correction, and can resume back up.
VIX
VIX continued its slide today, although not by a whole lot. Its MACD is now curving down. “19" was its resistance for over 3 years. Now, it may become a support. So, VIX could come all the way down to test 19. Going along with yesterday’s theme of “VIX peaking and coming down, up goes the market”, we may see the market go up more, before the market feels the need to make a double bottom. So, keep in mind of those support and resistance ranges.
President Bush had something to say about our economy and the stock market. According to this article, Bush said, "We’ve got a record that proves taxes can be cut, economies grow, deficits reduced and wars fought." That’s pretty cheerful; I wonder what Phil would say about that! 
The Asian markets certainly like what they are seeing. After the morning session, Hong Kong is up another 200+ points; Japan is up 160; and, China is gaining nearly 100 points!
In our after-hours trading, SYX beat the estimates (a pick from one of our members, optiondragon). Its shares were up more than +10% in AH trading! HRS added +3.5% as it posted higher profits!
Zman‘s has been watching the oil inventory and tracking earnings in the energy sector. HAL, CHK, NFX, SWN, HK, just to name a few; and he is up +650% on OII! Nice going, Z!!
In my posted trading today, we made some pretty good gains:
ICE Sept 170 calls, IHHIN, at $7.5, +10%
RIMM Aug 220 calls, RFYHD, at $10.5, +33%
PCP Sept 145 calls, PCPII, at $5.9, +9.3%
LVS Sept 105 calls, LVSIA, at $8.4, +15%
SPWR Sept 75 calls, QSUIO, at $7.8, +56% (partially out)
RIMM and ICE were from yesterday’s buys. SPWR was just incredible today jumping above 80 at one point; and we did take partial profits at the day high!! (see Happy Trades!! for more details) PCP, by the way, made a new all-time high of 144.89! We got out a bit early. But, I think this thing can go higher. So, we’ll be on the watch.
These trades prompted some nice words from one of our members:
"Happy,
Not sure how you’re doing it all. Amazing. Nice calls yesterday and today. I’m not posting much. Too busy analyzing, watching and buying/selling. I’ve already earned enough to more than pay for your new site and Phil’s (and maybe a new car). Thanks." Bill P
Good night and HappyTrading! ™
