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Monday Wrap-Up

Ouch!

A good day on the whole but my damn Google puts closed down 20%. I guess I will be gutting this one out through next week but I really believe there is no possible way they will turn in a $1.99 quarter after last quarter’s $1.54 and Q1 ’05 of just $1.29. The Google bulls will have you believe that, even though they missed last quarter by 12% and even though their best quarter last year was that $1.54 (up just .25 from worst quarter), that they will suddenly have a 30% jump in profits during this one.

OK, moving on from that silliness…

Well we got everything I wished for when I was in rally mode: The Nasdaq did take the lead and broke the 2,300 mark. The Dow almost broke 11,100 but looks safely above 11,000 and the S&P is just a hair under 1,300.

The rally was especially strong (and indicative of my Global Rotation theory) as it clearly was held today without any of the commodity players participating. Even homebuilders sat this one out so you can tell how well the rest of the market must be doing!

Oil crashed all the way down to $61 and continued down in the overnights (currently at $60.76, where we made our short plays last week). Gold stocks tanked as expected with NEM dropping 6% and gold finishing at $556. I stand by my statement that we need $570 to move again.

So why aren’t I happy? I don’t know, something is bothering me about the way this is forming up. Maybe the fact that we never had a big sell-off to test the lows or maybe it’s the way the Dow pulled back from 11,200 the way a vampire pulls back from a cross…

I need confirmation before I can feel comfortable with overnight positions again. Sure it would be nice if Iran resolves itself or if terrorists stop attacking oil production or if bird flu doesn’t wipe out more people than the black plague but we can’t have everything can we?

So I find myself in the very unusual position of being more bearish than most people this week and I’m not going to excuse it or try to justify it, just want you to know so you can see where I’m coming from.

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Obviously everything I recommended worked on a day like today (other than my own Google puts which, to be fair, I did not recommend) so let’s just go over the major movers from Friday and today.

The interesting thing about natural gas heading down to $6.75 is the threat this has on the coal industry. Most power plants in this country can burn coal or gas. Obviously gas is much nicer and cleaner etc. but it’s way more expensive than coal which is just laying around all over this country. I think $6 is the magic number at which utility companies would rather burn gas so we are just .75 away from big problems for ACI and BTU. Both have more than doubled in the past 12 months (BTU is up 500% from Feb ’04) and BTU may be in for a big pullback if gas prices continue downward. The $50 puts are back at $1.75 but if gas and oil continue down, they should do very well this month.

CY had a heck of a day, reflecting SPWR’s 10% gain by tacking on 5.5% themselves. That was enough for me and I cashed out my longs.

I also got fed up with TM today. The leaps were a mistake so I took my 10% profit and got out, the current month trades pay much better and tie up less money.

I flipped my PFE $25s into $27.50s for .15 and took 160% off the table!

PALM gained another 3.75% today, as predicted it’s a much safer play than RIMM.

CME continues to outperform Google but the options are outrageously priced. If I were so inclined, I would buy the stock and sell the Jan $440 for $65 (15%).

LVS came down 2% today, this was another one you had to wait out… I’m just a touch out on those $55 puts, now $2.35 (down 8%).

MSFT kicked it into high gear (for them) with a 1.5% gain today.

Last Wednesday I said “INFY began its comeback today.” Here’s the chart:
http://finance.yahoo.com/q/bc?s=INFY&t=5d

I know too many people are reading this blog when CMCSA suddenly shoots up at the open for no reason! Up 1.3% today, most of it in the first hour but it held up nicely and got noticed so all is well. The Jan $27.50s finished at just $2.75 (up 5%) and are now an even better deal.

I forgot about BCRX which jumped up 6% today on the same news as I recommended CHIR…

Last Weds TOTD BIIB continues to reward the faithful with another point gain today but it’s too much! Either take is off the table or set the stop at $6.50 to lock in 120% profit.

The Chinese wouldn’t have needed to build that wall if only the Barbarians were CSCO and they had just put a $20 sign in front of their country: http://finance.yahoo.com/q/bc?s=CSCO&t=1d

SHFL racked up another 5% but I stopped out this morning when it spiked and pulled back from the 200 dma. The Mar $22.50s finished the day at $4.10, up 500% since our pick. If it breaks the 200 dma with authority I may get in again but that was enough money for me.


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