Today reinded me of my daughter’s favorite game.
One of these indices was not like the others.
That’s right, our pals at the SOX made a real mess of a good day, mostly due to a report that that the utilization rate at microchip plants fell from 91.2 in Q2 to 88.6 in Q3.
That was enough to tumble AMD (-1%), BRCM (-2.6%), INTC (-3%), LLTC (-2%), MRVL (-2.5%), NSM (-2%), NVLS (-2.5%) and TXN (-1.7%). Since there’s only 19 total companiesin the SOX, it’s amazing it only went down 1%!
But say – weren’t we worried about excess inventory just about a month ago? Ah well, it’s always something…
Who do we blame for this disaster? Obviously Microsoft! With Vista still a Q107 event it’s hard to get excited about Q406 and a hint of trouble, like low output, can spook the markets.
As I said on Monday: “We must have our SOX, also weakening above 480, still miles below January highs of 559 so there is NO excuse for hanging out down here – we’ve been there, we’ve done that with a 120 point rally that began last October. MSFT must set us free and give us the green light to love tech again!”
MSFT was less than helpful today as it struggled with $30 earlyand couldn’t get back all day. The SOX have moved in lock-step with Microsoft all week.
Obviously with MSFTÂ ($294B) and INTC ($124B) do poorly, it will be very hard going for the Dow, Nasdaq and S&PÂ – all of whom list them as major components.
The Dow overcame a 5% drop by GM today to finish up at 12,321 while the S&P scratched out another 2 to close just under 1,403. The NYSE had a nice 33 point gain with a strong 8,919 and the Nasdaq held on at 2,454.
Even the transports turned it around and gained 18 points to 2,688 but the SOX gave up 5 and closed at 486.
We got our oil rally today with crude shooting up to $60.17, about to run into the descending 50 dma at $60.70 but making a dangerously strong move today.
Our call this morning to take protective covers over $59.17 was well rewarded with most of the oil patch posting big gains.
Gold ran right up and tested the $630 level so we will watch this one closely tomorrow. Oil and gold’s up move came against continued dollar weakness which is just not improving!
As we know, there’s nothing I hate more than a commodity based rally so, despite the great numbers being put up, I’ve still got my eye on the exit signs!
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For someone looking to lighten up I sure took a lot of new positions but there were just a few I couldn’t resist, just in case the SOX reverse this silly sell-off and take the Nasdaq back over 2,500!
ABX $27.50s were the right call but I just played it for the day as it ran up to $1.90 (up 15%).
AMAT wastaken in comments on the SOX drop and the Dec $18 puts finished up a nickel at .40.
BSX had a great day with a 2.4% gain but the Jan ’08 $17.50s barely budged at $2.55.
Our DELL $25s are looking good again as DELL’s earnings surprised 27 analysts by 25% on very slightly lower revenues. I feel PRETTY good about this pick!
DOW looked OK to meafter a nasty MER downgrade and dangerously rising oil prices (a major cost) so we took the Mar $45s for .50, which should give them some time to work it out.
EBAY Jan $35s came in at $1.15 but did at least pick up a nickel on the day.
Mr. Burns called the exact bottom of FCX in comments and I followed him out just after 2 pm, which was a good thing as the stock drove up in the afternoon. We said goodbye to the Jan $50 puts for $1.70 (up 386% from the $1 reduced basis) and took a .15 hit on the $50 puts, which is fine for a roll!
GOOG June $490s were taken for $61.50 to take advantage of selling the $500s for $18, which doesn’t seem like too much after a day like today!Â
If you really feel like crying – why didn’t we just hold our original Google plays and retire? Dec $410s for $12.60! Dec $420s for $9.60! Not only that but we did 2 updates and picked them again and again… And we thought making a lousy 1,970% on the September calls was good!
The JWN Dec $45 puts were dumped at the open for .50 (down .40) and I rolled that cost into the open Jan ’08 $50 calls (basis $5.20 after sale) as they have served their purpose.
MOT was just too darned cheap and we picked up the $22.50s, which promptly dropped a nickel to .35.
It wasn’t a bad day but I was disappointed that some of our other open positions didn’t do better. While few stopped us out, not to many were ready for take-off either.
As I’ve said all week, all it takes is one bad thruster to screw up the whole rocket so let’s hope the SOX can right themselves in time for us to hit the boosters!
Meanwhile the VIX has gone into suspended animation in preparation for a long voyage to the stars…
 
