Wang’s Happy Trading

The market started the day pretty well, seeing some gap-up opens in the energy sector and oil services. We quickly cashed out our gains in DVN and NOV (both mentioned yesterday). The DVN trade was purchased about a week ago and rendered a +43% gain; the NOV trade gave us an overnight profit of +22% gain:
HappyTrading
Posted July 2, 2008 at 6:45 am | Permalink (Edit)
DVN ($126.61)
DVNGZ, out at $8.6 (nice breakout)

HappyTrading
Posted July 2, 2008 at 6:49 am | Permalink (Edit)
NOV ($91.97)
NOVGQ, out at $8.3 (this one has room to go; out for now)

CHK, also mentioned here last night, flew to a new all-time high of $74; but, closed at $69.4, up just $2.04. CHK announced a new joint venture to develop a promising natural gas deposit.

Metals and mining sector (XME) was weak right from the beginning, especially coal mining companies. Coal prices fell today as some traders felt like the long-awaited correction had finally arrived. Many coal and steel stocks recorded double-digit declines: ANR -16%; PCX -14.9%; MEE -18.92%; ACI -17.19%. Steel companies also stumbled: X -12.52%; RTP -8.17; CLF -17.24%.

In late afternoon, VIX started to glide higher, and I said on the member board:
HappyTrading
Posted July 2, 2008 at 11:46 am | Permalink (Edit)
market
VIX seems to be creeping higher. coals will probably slide into the close.

OptionDragon also got us into plays on the short side, buying calls on SDS, ultrashort S&P:
optiondragon
Posted July 2, 2008 at 11:57 am | Permalink (Edit)
Bought SDS july 68 calls at 2.45 , stock at 67.50

These options closed at $3.3 today.

The coals led the way and the market picked up downward momentum going into the close. The Dow ended down 166.75 points; SPX dropped 23.39 points; Nasdaq fell 53.51 points:

VIX jumped +9.6% and closed at almost 26! Stocks were weak across the board. XME (metals and mining) tumbled a whopping 11.5%! OIH (oil services), which was up in the morning, ended down 3.96% (We did the right thing by cashing out early on NOV). XLE (energy) also reversed course and lost 3.02% (likewise, a good exit for us on DVN). PBW (clean energy) fell 5.4%. MOO (agriculture) was down 5.66%. USO (oil) reached a new all-time high, at $116.84, to close up +1.96%. SLV (silver) added +1.76%, and GLD (gold) gained +0.55%. DBA (agricultural commodities) advanced +1.91%. FXI (Chinese ADRs) slumped 3.61%.

SPX

SPX lost 23.39 points to close at 1261.52. It caught up with its daily lower BB. Its daily MAs and MACD curved lower.

Nasdaq

Nasdaq fell 53.51 points to close at 2351.46. It closed just above the 2350 support, but, also caught its daily lower BB. Its daily MAs and MACD continued lower.

Well, SPX made a new leg down and closed below the March support at 1280. Nasdaq is also every weak. VIX closed above 25 and could easily charge up to 30 from here. Oil is at a new all-time high, with crude trading above $144/barrel. We might see some bounces tomorrow. But, this market is still weak. XLF (financials) barely closed above $20 and could easily fall back under. So, be careful bottom-fishing. USO (oil) could break out again tomorrow. SLV (silver) and GLD (gold) (we have a position in this) are also in positions to go up more. Coals and steels could continue lower, if this is indeed a correction for the sector. Ultrashorts may be interesting vehicles to keep in mind for the market indices (for example, SPX: SDS; Nasdaq: QID; Chinese ADRs: FXP).

Good night and HappyTrading! ™