Over the Memorial Day Weekend, BP had failed to stop the oil leak in the Gulf of Mexico. Out of the gate, the oil services sector gapped lower. Further, the government announced criminal and civil investigations into the oil spill. BP stock tumbled 14.97%! Other oil services companies took a hit as well: RIG -11.85%, DO -7.27%, SLB -7.84%, BHI -5.95%. Other energy stocks suffered also. For instance APC dropped almost 20% and APA was down 4.6%!
We jumped into OIH puts this morning: June 01, 2010
07:46 | HappyTrading OIH ($93.50) Bought to Open 06P89.1 Jun 89 put, at $2.80
and, just 5 hours later, we locked in some intraday profits of +54%:
12:48 | HappyTrading OIH ($90.00) Sold to Close 06P89.1 Jun 89 put, at $4.30 +54%
Coal stocks were also very weak, as China’s latest manufacturing data showed slowing in its economy. WLT slumped 11.17%, giving back "all" of last week’s gain. CLF, BTU, CNX, ACI were all weak, down -8.16%, -6.39%, -6.2%, -5.43%, respectively.
The Dow was down 112.61 points; SPX fell 18.70 points; Nasdaq lost 34.71 points:
OIH (oil services) led the market down with an 8.89% decline. XME (metals and mining) lost 5.62% and XLE (energy) fell 4.75%. Both USO (oil) and UNG (natural gas) traded lower. SOXX (semiconductors) was down 2.26%. GLD (gold) was seen has a safe haven and added +0.87%. FXI (Chinese ADRs) slid 2.29%.
SPX
SPX fell 18.7 points to close at 1070.71. The daily MAs and MACD went lower.
Nasdaq
Nasdaq lost 34.71 points to close at 2222.33. Its daily MAs slipped and the MACD flattened.
The market actually held up well in the morning, with the market indices in the green, although energy sectors were weak from the start as discussed in the Market Forecast this weekend. In the last hour of trading, SPX penetrated below that 1080 level and the downward momentum picked up. VIX went higher to close above the 35 market. From where the market closed today, we could easily see the market test the recent lows (SPX 1040 and Nasdaq 2150). SPX 1060 could provide some support.
Still, there are many stocks that hardly budged. AAPL, for instance, traded higher today, as iPad sales topped 2 million in just 2 months!
Some trading ideas:
Upside:
As uncertainties surround global financial markets, gold is attracting investors again. After a quick pullback 2 weeks ago, gold is now back above $1220/ounce. GLD (gold ETF) tested $120 today, but, closed just under, at $119.91. Above $120, GLD should breakout again.
After the market, The FDA approved Amgen’s bone strengthening drug, Prolia. AMGN shares traded up $2.15 on the news. AMGN is one of the biggest biotech companies, and, with the volatile activities on the market, AMGN could see some more buying on this news. In addition, AMGN had come down with the market’s recent weakness from $60/share in April to today’s close of $50.76.
Downside:
The coal stocks bounced strongly last week. But, today’s reversal was severe. China’s slowing economy certainly did not help. In addition, both oil and natural gas traded down. Recent lows for this sector could be tested again. For WLT, $65 could be revisited. For CLF, $47.5 is the level to watch on the downside.
APOL hang on to its support at $52.5 last week, as the market found some strength. APOL finally closed below that level today and looks ready to break down.
Good night and HappyTrading! ™ 
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