Wang's Happy Trading

Last weekend, I said,
“The market is testing its January low, which for the new week, could be very interesting. The market has now fallen more than 15% from last year’s October high; Nasdaq has done worse, dropping more than 20%! If the Jan. lows do not hold, SPX’s next support is between 1225-1250; for Nasdaq, the support is between 2100-2200. Even if the market successfully tests the Jan. lows and bounces back, it’ll still have to fight through the daily MAs, which are now sloping down. So, it is prudent to be very cautious.”

The market tested the January lows, but, managed to close above the support levels.

On Monday, the market “slipped and slid”, while GOOG shares came under attack. On Tuesday, the market rallied as the Fed announced plans to infuse $200 billion into the financial markets. GOOG shares jumped as it received European approval for its purchase of DoubleClick. On Wednesday, crude oil reached above $110 and the market faded with profit-taking. On Thursday, gold went above $1000/ounce and the market closed slightly positive ahead of the CPI data. On Friday, CPI was benign, but, the news on Bear Stern’s (BSC) liquidity problems rattled the market.

We had a week of very light trading and profitted in metal plays:
GS ($162.6)
GPYKO, March 155 puts, at $3.5, -50.7%

RIMM ($105.1)
RULDB, Apr $110 calls, at $6.1, +5.3% (partially out)

X ($118.35)
XDC, Apr 115 calls, at $10.1, +12.2%

XAU ($208.8)
XKUCB, March 210 calls, at $4, +25%

XAU ($209)
XKUDB, Apr 210 calls, at $11.6, +87.1%

The open trades were:
BTU ($53.55)
BTUDK, Apr 55 calls, at $3.2 (open)
Friday close: $2.7; unrealized gain/loss: -15.6%

RIMM ($102)
RULDB, Apr $110 calls, at $5.05, $4.3 (2x, 3/7/08 ), $11 (3/4/08) (open, avg cost, 5.79, patially out)
Friday close: $5.05; unrealized gain/loss: -12.8%

I’ll be back momentarily with this week’s Market Forecast. It’s going to be a very interesting week with the BSC/JPM news, Fed’s immediate cut on the discount rate, the Fed meeting on Tuesday, and options expiration week on with Friday being a market holiday!

HappyTrading! ™