The market charged higher at open today, with SPX going above 1333.  But, the rally didn’t hold, and some profit-taking finally kicked in.  The market was already looking to slip yesterday.  However, after Fed’s announcement to keep interest rates low until 2014, stocks pushed higher again.  Gold jumped back above $1710/ounce, and further extended gains today.  We have been very careful this week, not chasing trades.  We took some decent profits this morning:

• January 26, 2012
• 10:35 | Ecstatic Plays NFLX ($117.30) Sold to Close 0127C115 Jan 115 calls, at $3.40 +39%
• 06:53 | Ecstatic Plays MOS ($56.50) Sold to Close 0127C55 Jan 55 calls, at $1.59 +49%
• 06:50 | Ecstatic Plays BIDU ($126.20) Sold to Close 0127C125 Jan 125 calls, at $1.80 +43%

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This morning, NFLX popped higher at open after delivering a strong quarter last night.  NFLX shares climbed to nearly $120/share before settling back down to close at $116.01, up +22.06% for the day.  SNDK sank 11.37% on softer forecast.  CTXS’s guidance was also light and its share shed 3.86%.  OXY reported a strong quarter, but its shares fell more than 3%.  Energy shares were mostly weak:  HES tumbled again, down 4.05%; APA lost 1.92%; IOC was down 3.41%; EOG dropped 1.93%.

After the market, RVBD tumbled 13.77% on weak outlook.  JNPR provided a similar story with a soft forecast for 1Q; its shares shed 8%.

The Dow was down 22.33 points; SPX slid 7.62 points; Nasdaq fell 13.03 points:

SOXX (semiconductors) dropped 1.08%.  OIH (oil services) fell 1.28%.  XME (metals and mining) slid 0.92%.  GLD (gold) and SLV (silver) were up.  UNG (natural gas) spiraled lowered by more than 5%.  XLF (financials) was in the red as well.

SPX

SPX fell 7.62 points to close at 1318.43.  Its daily MAs glided up, but, MACD was slightly down.

Nasdaq

Nasdaq dropped 13.03 points to close at 2805.28, still above 2800.  Its MACD was flat.

The market has climbed higher and higher since the beginning of the year.  Now, we are going into the last week of January.  Profit-taking seems to be finally kicking in.  Good earnings were not good enough for today; forecasts had to also be strong.  Further, the "punishment" for light forecasts were particularly strong.  It is perhaps suggesting that this market is overbought for the near-term.  Still, this market is deep into its new bullish phase.  We’ll get the latest GDP report tomorrow.  Let’s see how the market reacts to the numbers.  We are back into holding mostly cash.

Good night and HappyTrading! ™

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Happy Chinese New Year!

恭禧發財 龍年行大運!

(Gong Xi Fa Cai; May your Year of the Dragon be filled with good fortunes!)

Last weekend, in my Market Forecast, I said,

"For the new week, earnings season is getting started.  Many financial firms will report their earnings, including GS, MS, BAC, WFC, and BLK.  Some tech belweathers come in on Thursday, including IBM, INTC, and GOOG.  Earnings from the financials early in the week could set a tone for the broader market.  Breaking above SPX 1300 would be a strong signal."

Monday was MLK Day and a market holiday.  On Tuesday, the market gapped up on encouraging economic data from China.  However, the market struggled to keep above SPX 1300.  Strong earnings from the semiconductor sector on Wednesday and Thursday finally pushed the market to rally higher.  We captured some really nice trades, including a +105% profit on RVBD and a +147% gain on NFLX.  The market was basically flat on Friday as GOOG’s earnings miss drew some caution and profit-taking.

We had another really nice week of trading with nearly all of the trades being profittable!

For the week, the Dow was up +299.42 points; SPX added +26.29 points; Nasdaq gained +76.03 points.  Gold climbed back up to nearly $1670/ounce.  Oil, on the other hand, remained weak, and closed just above $98/barrel.  Many of the Asian markets are closed to start the week for the Lunar New Year.  Let’s take a look at where the US market stood after Friday’s close:

SPX

On Friday, SPX was up +0.88 point to lcose at 1315.38.  Its daily MAs and MACd glided up.

Nasdaq

Nasdaq slid 1.63 points to close at 2786.7.  Its daily MAs and MACD were slightly higher.

This market has been glided higher since this year’s first trading day on 1/3/2012.  VIX barely closed above 18 on Friday!  For the new week…

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On Wednesday morning, TXN and LLTC reported superb earnings and pushed the semiconductor higher.  Both TXN and LLTC popped more than +10% between Wednesday and today.  After the market on Wednesday, XLNX further confirmed the strength in the sector.  ALTR also benefitted from the news and vaulted more than +10% as well.  GS stoked the financial sector on Wednesday with its better-than-expected quarterly numbers.  GS climbed more than $10 since Tuesday’s close.

FFIV provided further fuel to the rally with its strong forecast.  FFIV shares were up +10.64% today.  We traded on FFIV earnings with RVBD, getting a quick overnight double:

• 06:48 | Ecstatic Plays RVBD ($29.50) Sold to Close 01C27.5 Jan 28 calls, at $2.05 +105%
• 06:45 | Ecstatic Plays RVBD ($99.43) Sold to Close 01C27.5 Jan 28 calls, at $1.98 +98%

In addition, we added calls on NFLX and scored a +147% overnight profit:

• 07:03 | Ecstatic Plays NFLX ($102.70) Sold to Close 97.5 Jan 98 calls, at $5.50 +147%
• 06:44 | Ecstatic Plays NFLX ($100.85) Sold to Close 01C97.5 Jan 98 calls, at $4.25 +91%

NFLX was up +5% today.

For myself, I add some CRM Jan 105 calls at $2.6 and sold them in the morning at $10.75 (day high) for a +313% gain:

CRM jumped +6.32%.

After the market today, 4 big tech companies reported:  GOOG, MSFT, INTC, and IBM.  Besides, GOOG, the other 3 reported well and went higher in after-hours trading.  In GOOG’s defense, the estimates were perhaps just too high.  "Earnings excluding items rose to $9.50 per share from $8.75 a share in the year-earlier period.  Net income climbed to $2.71 billion from $2.54 billion.  Net revenue, which excludes fees shared with partner web sites, jumped to $8.13 billion from $6.37 billion a year ago."  But, analysts were looking for earnings of $10.49 per share on revenue of $8.41 billion.  GOOG shares got hammered this evening, down 9%, almost $60!  BIDU shares fell 2% in sympathy.

AXP reported a solid quarter, but shares slid 2% on disappointing revenue.  COF net income fell sharply and its shares went along with its earnings, down 4.45%.  Both MA and V traded lower this evening.

The Dow was up +45.03 points; SPX added +6.46 points; Nasdaq gained +18.62 points:

SOXX (semiconductors) was up +1.86%.  FDN (internet) gained +2.07%.  GDX (gold miners) lost 2.05%.  XLF (financials) was up +0.93%.

SPX

SPX added +6.46 points to close at 1314.5.  Its daily MAs and MACD glided up.

Nasdaq

Nasdaq gained +18.62 points to close at 2788.33.  Its daily MAs and MACD also went higher.

Looking back now, it is more apparent that the market has been on a steady climb since mid December.  Certainly, with all the worries and headlines on Europe, it did not "feel" that way until the New Year.  VIX closed below 20 today, its lowest level since July 2011!  Still the market technicals are toppy.  But, buyers just kept on coming in.  Perhaps there’s still too much money on the sideline?  We don’t argue with the market, so, we are still trading the upside carefully and cashing in on profits as the market pops another leg higher.  However, it does feel like the market could use a quick pullback.  With MSFT, INTC, and IBM all reported well, we may see SPX test 1320-1325 tomorrow.  But, that’s the closest resistance and should induce some profit-taking.  We locked in a lot of profits today and are back in cash.  Tomorrow is options expiration day for January.  We could see a volatile day.

Good night and HappyTrading! ™

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Happy Martin Luther King Day!

Last weekend, in my Makret Forecast, I wrote:

"For the new week, the market may still need a couple of more days to consolidate.  But, the market does appear to be on the verge of break higher.  Above 1280, SPX could quickly run above 1300.  Nasdaq could see a burst to test 2750 on a breakout."

The market basically had a "repeat" performance as the first week of the year, meaning a day of gapping up; then, going nowhere for the rest of the week!  On Tuesday, the market had a sizable jump, with SPX closing above 1290.  As the market ran up, we captured some nice trades with intraday doubles!  The market treaded water on Wednesday and Thursday, mostly weak in the morning and stronger in the afternoon.  Friday morning brought on a quick selloff, dropping below 1280 on SPX.  But, the market managed to climb back up and close near 1290.

We had a pretty good week once again.  Here are the closed trades:

• 12:31 | HappyTrading IBM ($178.80) Sold to Close 01P180 Jan 180 put, at $3.55 -19%
• 07:07 | HappyTrading BIIB ($117.80) Sold to Close 01C110 Jan 110 calls, at $8.00 +70%
• 09:32 | HappyTrading AMZN ($177.00) Sold to Close 01P175 Jan 175 put, at $2.05 -24%
• 11:03 | HappyTrading CTSH ($70.30) Sold to Close 01C70 Jan 70 calls, at $1.60 +23%
• 07:28 | Ecstatic Plays BIDU ($127.25) Sold to Close 0113C125 Jan 125 calls, at $3.45 +15%
• 10:27 | Ecstatic Plays FAS ($73.50) Sold to Close 0113C70 Jan 70 calls, at $4.10 +88%
• 10:13 | HappyTrading GS ($98.65) Sold to Close 01C95 Jan 95 calls, at $5.05 +84%
• 07:08 | Ecstatic Plays FAS ($74.00) Sold to Close 0113C70 Jan 70 calls, at $4.50 +106%
• 11:23 | HappyTrading NFLX ($97.30) Sold to Close 0113C95 Jan 95 calls, at $5.50 +31%
• 08:14 | Ecstatic Plays FAS ($69.80) Sold to Close 0113C70 Jan 70 calls, at $2.00 -22%

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For the week, the Dow was up +62.14 points; SPX added +11.28 points; Nasdaq gained +36.45 points.  Oil fell back just below $100/barrel, while gold bounced up to trade closer to $1650/ounce.  Monday was a holiday to honor Martin Luther King, Jr.  This evening at the time of this writing, Asian markets were mostly higher.  Let’s see where the US market closed on Friday:

SPX

On Friday, SPX fell 6.41 points to close at 1289.09.  Its daily MAs and MACD were little changed.

Nasdaq

Nasdaq dropped 14.03 points to close at 2710.67.  Its daily MAs went up, but, the MACD was flat.

Well, the market did break higher, but was hesitant to continue the rally.  On Friday, after the market, S&P downgraded euro zone sovereign rating, which was already anticipated by the market.  Global markets slipped on Monday, as the US was on holiday.  For the new week…

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In my Market Forecast this weekend, I highlighted the recent bulliness of the biotech sector.  During the past two days, biotechs have led the market higher.  MDVN went up +10.9% in the past two days; VRTX added +7%; CELG gained +4.5%.  GILD popped +356% today (check out the run on GILD since 12/19/2011)!

Financials jumped today, and, we were there to captured some quick profits, including a +106% on FAS weekly calls, which we picked up just yesterday:

• January 10, 2012
• 10:27 | Ecstatic Plays FAS ($73.50) Sold to Close 0113C70 Jan 70 calls, at $4.10 +88%
• 10:13 | HappyTrading GS ($98.65) Sold to Close 01C95 Jan 95 calls, at $5.05 +84%
• 07:08 | Ecstatic Plays FAS ($74.00) Sold to Close 0113C70 Jan 70 calls, at $4.50 +106%

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This morning, LULU boosted its guidance, sending its share up +12%.  On the other hand, TIF dropped 10% as it reported weakened sales growth during the holidays.

Energy stocks were strong as well, which we also looked at in this weekend’s Sector Watch.  FSLR jumped +5.24% (this should test $40 soon).  NOV climbed +3.27%.  EOG, which received an upgrade this morning, went up +3.28%.

The much-beaten Chinese internet stocks bounced today:  BIDU +5.63%; SINA +12.8%; SOHU +7.57%.

The Dow was up +69.78 points; SPX added +11.38 points;
gained +25.94 points:

XME (metals and mining) added +2.75%.  OIH (oil services) rose +2.44%.  BTK (biotech) popped +2.37%.  XLF (financials) gained +1.82%.

SPX

SPX added +11.38 points to close at 1292.08.  The daily MAs and MACD went higher.

Nasdaq

Nasdaq gained +25.94 points to close at 2702.5.  The daily MAs and MACD also went up.

Nice rally today.  Both SPX and Nasdaq broke above their respective resistance levels:  SPX 1280 and Nasdaq 2680.  VIX slid again, but, not by much; and, it stayed above 20.  Things are pretty much marching along what we discussed this weekend in my Market Forecast.  Agriculture stocks also went higher today after taking a break late last week.  CF, AGU, MON, MOS, POT all look pretty good.  Both MON and MOS beat their respective earnings estimates.

This morning, in the Trading Room, I cautioned members to wait a bit before getting into new positions:
January 10, 2012 6:56 AM
after a strong gap up, don’t be too eager to add new positions in the first hour of trading, unless you got in right at open…

We saw this behavior last week as well.  Remember last Tuesday, when the market jumped right at open and then pretty much held constant for the rest of the week?  So, instead, we locked in profits today.  The good thing was the risk that we took yesterday before the close, which allowed us to catch the big move today.  Now, we’ll have to see if the market can push higher tomorrow.

Good night and HappyTrading! ™

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