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Friday Morning

Asia had some nice gains this morning with the Nikkei and the Hang Seng posting 2% gains, India picked up 379 pts (4%) – wouldn’t it be nice if we could do that just once? Europe is solidly up but not too eciting at the mid-day, probably waiting for our markets to react to the job numbers at 8:30.

The jobs number was way low (75K vs 180K expected) so we should be in great shape today so any kind of downturn would be a serious disappointment. We need the Dow to stay over 11,280 and the goal of the day is for the Nasdaq to stay over 2,230 but I won’t be worried if it can’t do it today as long as it doesn’t fall back below 2,220.

Rates should drive down on this news, especially as unemployment dropped another tenth which, coupled with strong productivity gains means the Fed should be about done. On the downside, this will drop the dollar as the rest of the world bank groups are still raising but we’ll worry about that next week.

This should rocket the miners and give yet another boost to oil companies. Between the weekend and the dollar drop we should be back over $71 today.

You have to take gains in oil and gold with a grain of salt today as the dollar may bounce back next week and quickly wipe them out. With oil, the demand picture was not that strong and next week will give us a clearer indication of the holiday driving picture. On a long-term perspective I noticed that the impressive market gains posted by Honda and Toyota yesterday were almost entirely in the small car segment which means consumers are already changing their behavior.

I am starting to buy now but if we have a huge day I will take the money and run into the weekend as a big rally might be a little overdone at this point.

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The Vonage IPO is now such an unqualified disaster that they may have to give back the money to some of the buyers! As I said back on the 23rd, before the issue: “This company is a classic .com model that needs money so they can lose much more money than they are losing now and maybe if they are really cool they will figure out a way to make money one day but there is no particular plan to make money at this time…” The 90s are officially over!

INFY has been beaten down as the Indian markets fell 20% and the rupee dropped considerably against the dollar (2/3 of their revenue comes from the US) but today’s action on the Bombay stock exchange suggests that those factors may be waning. 6 weeks ago this stock was at $84 so I like the $75s for .70 which seem underpriced compared to the July’s which will set you back $2.40.

CHA is a nice China play on the mobile phone market and has also been trashed of late and the Sept $35s are $1 while you could hedge part of the position by selling the Jul $35s for .90.

If oil is up on strong economic demand then why is BNI down? The $80s seem well in reach of a rebound at $1.05.

UNP is sitting just under its 50 dma of $93.50 and should open above it which makes the $95s a nice pick at $1.15.

FDX is another play on global expansion and the $115s are .70.

On the Nikkei recovery I love MTU, which was a huge win for us in April, and the Nov $12.50s have a very low .60 premium at $2.10.

Money is coming back into health care and UNH Jul $50s are only $1.05.

The AET $40s we picked last week at .60 are still a good buy at $1.05 (what is it with that number today?).

ATI $70s are risky but could also be a big score at $1.40.

Boeing buddy AIR is also tough call but the $25s are only .40 for a gamble.

Now is really the time to get those ADBE $30s as they are heading to court with Microsoft over Adobe’s PDF distribution (and it’s about time). We picked them up at .60 and yesterday they were .45 but probably back to .60 this morning.

We liked the AU $50s when they were $1 on Tuesday so at .50 they still make sense but this is a day trade if that.

How the heck did BOOM trade down to $28? When will this stock get options??? BUY BUY BUY!!!

TXNs 200 dma is $32 so any up move this morning means the $32.50s should be worth the .55.

.55 will give you all the way to July on MOT $22.50s.

HD has been beaten down for all the wrong reasons so the Jul $40s are an excellent buy at .60.

I don’t know why you can still buy GE $35s for .25 but I’m in!

PFE Jul $25s for .35? Come on, how can you not?

INGN is one I used to own but got tired of waiting. They use molecular therapies to treat cancer and just had a good study outcome so I’m back to liking the stock at $5.03.

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Let’s not forget Google has a channel that we were trading in that says sell at $393. At $387 I buy the first 1/10 of my # of calls in the $350 puts, then another 1/10 at each dollar through $393 where I should have 1/2 of my call position in puts and I will be looking to lighten up on the calls at any sign of rejection.

If it breaks up from there (and by the way, you don’t keep buying puts if it’s rocketing up!), say past $395 I look to start buying some $360 puts to until I have a set of each. Any higher (than $403 apx.) and I take the loss on the $350 puts and just ride out my $420s as far as they take me.

Have fun trading today and have a good weekend as I am out of here this afternoon!

- Phil


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