The market certain had an impressive 3-day rally. Since Monday’s big jump (Dow +405 points) on Europe’s rescue package, the market continued to push higher. We saw many of the recent market leaders make new highs. For example, NFLX traded as high as $119.5 on rumors of being a buyout target for AMZN. Just last week, NFLX was barely above $90. That’s a $30 gain in 4 days!! BIDU, which traded down to $620s last week, experienced a tremendous jump ahead of the 10-to-1 split yesterday. After the split, BIDU continued to jump higher. Today, it traded as high as $82.29, which is equivalent to above $820 pre-split! That’s about $200 up from last week’s low! Therefore, in our Trading Room today, we were playing the puts (downside) on NFLX and BIDU:
HappyTrading May 13, 2010 7:31 AM
BIDU
80 puts only $3.7
Quarryman May 13, 2010 8:39 AM
Noodling with a few BIDU puts on a quick trade. BIDU about 79.2
Quarryman May 13, 2010 12:36 PM
I’m out of BIDU. In the 80 puts at 4.20 out at 6
HappyTrading May 13, 2010 8:57 AM
NFLX
110 puts were only at $3; now asking $4
rocketbottle May 13, 2010 11:04 AM
I needed another short hedge, I couldn’t help it, I bought NFLX 110 puts.
rocketbottle May 13, 2010 12:25 PM
Out of NFLX puts +33% no need to be greedy
Nice trading everyone! 
With the way that things jumped on Monday, it was not easy to chase the calls (longside). So, we waited patiently for some of these high-flyers reach a top, then, play the downside.
Although the broader market really didn’t come down until the last couple of hours, some sectors were weak from the open. Fertilizers started to slide right from the beginning and ended at the day lows, giving back all of yesterday’s gains: POT -2.17%, CF -2.92%, BG -5.52%, MOS -2.77%. Retail stocks were also on the weak side. This morning KSS (Kohl’s) reported solid earnings but missed on the guidance. KSS traded down 5.84%. SHLD (Sears) fell 3.76%. After the market, JWN (Nordstrom) also disappointed on its forecast; its shares slipped 2.62 in after-hours trading. Techs were also under pressure from CSCO’s earnings last night. CSCO shares closed down 4.53% for the day.
The Dow was down 113.96 points; SPX fell 14.23 points; Nasdaq lost 30.66 points:
Most sectors closed in the red. Even GLD (gold) and GDX (gold miners) took a breather. USO (oil) continued to slide, down 1.74%. OIH (oil services) fell 1.21%. SOXX (semiconductors) slumped 2.70%. XLF (financials) dropped 1.81%. FXI (Chinese ADRs) slide 0.53%.
SPX
SPX fell 14.23 points to close at 1157.44, below the 1160 level. The MACD was flat.
Nasdaq
Nasdaq lost 30.66 points to close at 2394.36. It closed below 2400 and below its daily MAs.
Both SPX and Nasdaq closed below their respective daily MAs, and, their daily MAs just formed new bearish formations. VIX went up +4.55%, closing at 26.68. The market picked up downward momentum late in the day as the financials started to sell off on news that more banks were being probed on mortgage securities. The market enjoyed a nice 3-day rally, almost as dramatic as last week’s quick selloff. Are we now back to focusing on the problems and uncertainties that still exist on the market? We still have to see how this whole financial reform plays out. In addition, last week’s quick selloff has prompted discussions on possible circuit breakers. The debt crisis in Europe is still a big question mark, even with the $1 trillion rescue package. Oil spill in the Gulf has not yet been contained. So, back to the fundamentals? Perhaps.
Good night and HappyTrading! ™ 
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