Weekly Wrap-Up

That was a nice, short, uneventful week!

We finished the week up just slightly with some good consolidation but, as it was the end of the month, I was a little suspicious about the action into the close.  Volume was not terribly impressive but there was a huge surge as we sold off into the close, hopefully just some funds cashing out but not the way you want to end a week.

We made good progress on our virtual portfolios with fantastic gains in our small virtual portfolios with our 2-week old $10,000 Virtual Portfolio already at $13,965 and our new Day Trading Virtual Portfolio up a decent 10% in 10 days of trading.   Also new is our Stocks Virtual Portfolio but that’s up just 2% in two weeks as there wasn’t enough volatility to play around with.

Our older virtual portfolios also held their own:

• The Short-Term Virtual Portfolio picked up 8% for the week as we went a little more to cash and are, overall, quite bearish with a lot of open puts covering not too many longs. 
• Our Long-Term Virtual Portfolio added just 4% and is still fairly bullish with 23 uncovered calls.  We are still well covered on 30 other positions and, of course, our STP puts outweigh the open balance on the calls by a good deal (about 50%).
• Complex Spreads are flat, up 315% for the year, as GOOG and APPLE are fully covered so the run in both is not doing us any good at the moment.  We are heavy in the CROX Jan $10s, still hopeful they’ll come back.
• It was a good call to hold our position in the $25,000 Virtual Portfolio as we gained another 40% this week, now up 84% at $46,081.  We took some bullish positions there in EDU and SUN and dismantled the FSLRfly, leaving just the $270 puts.

We closed just 55 positions this week with a 66% average gain, mainly taking winners off the table to get some cash when we had the opportunity but we are not that well protected from a big sell-off in our small virtual portfolios so I’ll trust these gains only when we get to more cash.  Meanwhile, we’ll have to watch carefully and see what sticks.

We got the oil pullback we were looking for but, with a finish at $127.35, we don’t really have much to celebrate just yet.  I wrote up a major expose on how the oil market is being manipulated and it was certainly the topic of the week.  It will be interesting to see how much follow-through we get ahead of the rule changes.  We cashed out of our oil puts and actually made some bullish plays for next week as I think we’re looking at a failed test of $130 before we get a real leg down below $120 but, if there isn’t a good recovery by Wednesday, I’ll be looking for a bearish inventory report to get the ball rolling down the hill again.

Tuesday evening I said that we were hoping for a nice, slow rise in the markets and that’s pretty much what we got for the week.  In Tuesday’s wrap-up I mentioned our picks in FDX, C, JOSB and QID puts all of which continued going so well that even someone coming in that late in the day could have joined in.  We played FSLR like a fiddle this week, going in and out and making the nice gains in our small virtual portfolios possible.  Optrader also posted his excellent Swing Trading Virtual Portfolio on Wednesday morning and he ended the week a little bearish as well.

Wednesday morning we were excited to be making progress on oil but sadly the pre-market open was about where we finished the week.  We got bullish on VLO, which was well rewarded as well as SUN, which gave us a quick pop but fell back down (June $45s are still $1.65).  TM Jan $90s were a great morning pick, up 29% from an easy entry on Wednesday’s sell-off and the BAC 2010 $35s have gone nowhere at $4.65 but I do like them long-term. 

Despite disappointing market moves on Wednesday, in the Wrap-Up I said: "On the whole, it looks like the Nasdaq is simply consolidating under the 200 dma at 2,500 and as long as we hold 2,400 we can remain bullish."  That call worked out as we did break up the next day over 2,500.

The GDP report was the catalyst that got us over the hump at the Nasdaq but I didn’t like the internals and started turning a little more cautious as we rallied.  I called shenanigans on the estimates for the oil inventory report on Thursday morning and we did indeed get 8.8 of the 10M barrel draw I predicted and, the funny thing is, also as I predicted, that was still not enough to rally oil back to hold $130.  We got a nice, quick 50% gainer on our USO calls that I picked in the morning post and got the heck out right at the top as making 50% in 1 hour is always a good day’s work!

By Thursday evening I was trying to illustrate what was bothering me and we pulled out the Big Chart, which clearly illustrated we are still caught in a rut between our "Feeling Better" zone and declining 200 DMAs.  The Nasdaq, SOX and the Russell puched through for us but we need the Transports to confirm a real move as well as participation from the S&P and the NYSE, who have been dragged down by financials and commodities this week.

Friday we noted Cramer had started banging the commodity drum again, giving us a fantastic opportunity to go short on his pals at JOYG as he stampeded his viewers into a stock that’s already up over 100% in 12 months.  We’ll see how long the Cramer magic can keep the commodity bubble going this time as his endless pumping of housing plays extended that rally far past all logical values.  Click on that link and see if Cramer isn’t just following the same script on oil that he read you two years ago to keep you in housing!  Another example is this video.

We’ll see if the last two days were just window dressing or of a genuine rally is building.  We get a lot of data next week and I’m approaching it cautiously as there hasn’t been anything this week to turn me gung-ho bullish.