What an amazing week that was!
Happy and I were talking and we are both very pleased with the charts – more on that tomorrow…
Last weekend I told you that the market could indeed exist in a metaphysical bullish or bearish state indefinitely and it would be up to the observers to decide which it was going to be. You don’t have to believe in Santa Clause to sit on a fat guy’s lap and we were like kids in a candy store this week, grabbing up calls and making hay while the sun shines (while keeping our trusty umbrellas under the mattress!).
Our mattress plays seemed almost silly this week but they sure made us feel good on Thursday morning and we still haven’t gotten past stage one as the market posted gain after gain all week. There was little economic news of note and earnings have been coming in better than expected with 66% of the reporting companies beating expectations and only 17% missing so far. Of course Google was the beat of the week but there was plenty of cheer to spread around with C (got WM), KO (got ’em), INTC (got ’em), JNJ (got ’em), JPM (not int.), MOT (got ’em), GOOG (got a gaggle) and NOK (got MOT) all getting lots of good attention.
GE (got ’em) was great too but pinned at $35 while IBM (got ’em) got beaten down (maybe pinned) despite a pretty good report. EBAY (got ’em) also seemed to go the wrong way, finishing right in between the $32.50 and $35 options. BAC was iffy but shook it off while MRK (had puts 8-() and PFE took off despite aging pipelines. In short, things looked pretty good with the majors and things were so good that we’re going to need to update our chart levels as our old ones are pretty much all green now:
|
|
|
Day’s |
Break |
50 |
62% |
Break |
|
Index |
Current |
Move |
Down |
DMA |
Fib Level |
Up |
| Dow | 12,961 | 153 | 12,400 | 1,245 | 12,528 | 12,650 |
| Transports | 2,905 | 26 | 2,736 | 2,817 | 2,889 | 2,983 |
| S&P | 1,484 | 13 | 1,410 | 1,426 | 1,427 | 1,460 |
| NYSE | 9,697 | 95 | 9,250 | 9,250 | 9,218 | 9,465 |
| Nasdaq | 2,526 | 21 | 2,400 | 2,440 | 2,454 | 2,500 |
| SOX | 487 | 1 | 470 | 472 | 477 | 490 |
| Russell | 828 | 9 | 790 | 798 | 803 | 820 |
| Hang Seng | 20,566 | 266 | 19,400 | 19,941 | 20,192 | 20,600 |
| Nikkei | 17,452 | 80 | 17,200 | 17,417 | 17,617 | 18,000 |
| BSE (India) | 13,897 | 266 | 12,750 | 13,425 | 13,814 | 14,200 |
| DAX | 7,342 | 99 | 6,700 | 6,818 | 6,830 | 7,100 |
| CAC 40 | 5938 | 109 | 5,500 | 5,597 | 5,601 | 5,780 |
| FTSE | 6,486 | 46 | 6,200 | 6,298 | 6,297 | 6,450 |
I said last week that it was up to Europe to lead the way and boy did they with a huge jump on Thursday and Friday. I had to recheck the CAC though as I can’t believe it’s up 10% this month but it is and the FTSE and DAX are up huge as well, all setting new records. The EU markets are on a huge 4-year run but we are all playing catch-up with Asia, which shows no signs of slowing down.
We appropriately started this week off with our Google Earnings Plays (more on those later) and Asia gave us a real boost on Monday morning as we came out of the G7 meeting like one big happy family. Citibank downgraded TSO, possibly the only thing keeping them under $110 for the week but we were in and out of that all week as it now makes our favorite momentum play. We wisely gave up on oil puts (mostly) for the week as we watched our barrel count diminish faster than expected but that didn’t stop us from shorting SLB to great effect on Tuesday. While we worried about global inflation I said: "Let’s be more concerned about a pullback in Europe today than in our own markets but, if they can hold up, we will have a green light to head off to the races (kind of like Brazil in the good old days!)."
Maybe I’m old but I remember what a hot, hyper-inflated market Brazil was back in the ’80s as even our fine banking institutions plowed money into an economy that was paying 90% interest. While we’re not there yet, I’m sure they didn’t see it coming either. Of course we want to have money in the markets as stock certificates themselves are commodities of a sort – frankly corporations show more restraint printing those up than our government does in printing dollars.
Tuesday looked toppy and we put a little under the mattress but we didn’t end up needing any support even though YHOO had a shockingly poor report that gave us a poor start on Wednesday. It was off to the races on Wednesday as the Dow made a record close but the SOX started falling apart on us so we weren’t able to relax. Thursday morning Asia melted down and we didn’t and I made my call of the week on Thursday morning when I said: "Let’s remember that Asia sold back down to Monday’s levels and the Dow is 200 points above that. A 100-point drop would be a sign of strength not weakness… hopefully a nice opportunity to pick up a little money and add a few positions as other people panic around us!"
The markets opened 50 points lower but ended the day back above 12,800 – AND THEN GOOGLE HAD EARNINGS! There was no doubt on Friday morning that we were ready for lift-off and we opened above and held 12,900 all day.
As I said in the morning: "The dollar is dead and blah, blah, blah – if no one else cares why should we? We have now entered into a very funny/complacent phase of the market where a drop in Asian markets don’t bother us and a collapsing US economy doesn’t bother Asia – it’s a big world out there and we are moving from first to third in style!"
We ended the week with a huge bang and the Dow finished all the way up at $12,961 and only the SOX and Transports (same all week) failing to pin the needle – nothing to worry about yet but plenty to worry about if it continues next week.
We also pinned the needle on our virtual portfolios with massive gains as we were ridiculously bullish at just the right time for it. Nonetheless we took a lot off the table too and I will continue to scale back a bit next week, as it will be more fun to play this rally with house money anyway!
It was a very busy closing week and the Short-Term Virtual Portfolio lost 43 positions with an average gain of 53% on 26 average days held and a spectacular cash gain of 1,140% since most of the gains came from positions we sold (COP, 5 Googles, PTR, RIG and TGT, TIE and TSO). This is a really good percentage as we had 11 total wipeouts, mostly puts (no matter how bullish, we hedge) but they were mitigated by a great comeback by TXT (up 500%), YHOO puts (up 443%), PEP $35s (up 400%), our yesterday trade GOOG $490 puts (up 167%) DELL calls (up 167%) as well as doubles from GOOG, GOOG, PTR, COP, WM and TM:
| Symbol | Qty | Paid | Sold | Prof/Loss | % | |||||
| BNI | A | $ 80.00 | P | 4/4 | 10 | $0.90 | $ – | 4/20 | $ (0.90) | -100% |
| COP | A | $ 65.00 | P | 4/3 | -100 | $ 0.45 | $ – | 4/20 | $ (0.45) | 100% |
| DIA | A | $120.00 | P | 3/7 | 100 | $1.00 | $ – | 4/20 | $ (1.00) | -100% |
| DELL | A | $ 22.50 | C | 2/16 | 30 | $1.05 | $ 2.80 | 4/17 | $ 1.75 | 167% |
| DNA | A | $ 80.00 | C | 3/5 | -10 | $3.80 | $ 2.00 | 4/17 | $ (1.80) | 47% |
| GOOG | A | $470.00 | C | 3/30 | -20 | $ 8.45 | $ 12.50 | 4/16 | $ 4.05 | 48% |
| GOOG | A | $490.00 | P | 4/19 | -50 | $ 4.50 | $ 1.00 | 4/20 | $ (3.50) | 78% |
| GOOG | A | $490.00 | C | 4/3 | -20 | $6.10 | $ – | 4/20 | $ (6.10) | 100% |
| GOOG | A | $500.00 | C | 4/16 | 20 | $2.00 | $ 2.75 | 4/18 | $ 0.75 | 38% |
| GOOG | M | $480.00 | C | 4/19 | 10 | $14.00 | $ 21.00 | 4/20 | $ 7.00 | 50% |
| GOOG | M | $510.00 | C | 4/16 | 20 | $4.75 | $ 5.85 | 4/18 | $ 1.10 | 23% |
| GOOG | A | $450.00 | P | 4/19 | -50 | $ 5.90 | $ – | 4/20 | $ (5.90) | 100% |
| GOOG | A | $490.00 | P | 4/20 | 150 | $ 2.25 | $ 6.00 | 4/20 | $ 3.75 | 167% |
| GOOG | M | $470.00 | P | 4/19 | -10 | $ 5.25 | $ 4.50 | 4/20 | $ (0.75) | 14% |
| HAL | M | $ 32.50 | C | 4/11 | 20 | $1.25 | $ 1.25 | 4/17 | $ – | 0% |
| ICE | A | $130.00 | C | 4/17 | -30 | $3.00 | $ 0.75 | 4/19 | $ (2.25) | 75% |
| IGW | A | $ 60.00 | C | 4/3 | 10 | $1.35 | $ 4.10 | 4/20 | $ 2.75 | 204% |
| MCO | A | $ 70.00 | P | 4/17 | 100 | $1.20 | $ 2.20 | 4/18 | $ 1.00 | 83% |
| MRK | M | $ 42.50 | P | 3/5 | 75 | $0.65 | $ – | 4/20 | $ (0.65) | -100% |
| MT | M | $ 55.00 | C | 3/30 | 10 | $1.55 | $ 1.75 | 4/17 | $ 0.20 | 13% |
| NEM | A | $ 50.00 | C | 2/23 | 10 | $0.50 | $ – | 4/20 | $ (0.50) | -100% |
| INTC | M | $ 20.00 | C | 1/22 | 40 | $0.65 | $ 1.25 | 4/17 | $ 0.60 | 92% |
| INTC | J | $ 20.00 | C | 3/5 | 50 | $0.98 | $ 1.70 | 4/17 | $ 0.72 | 73% |
| PEP | A | $ 65.00 | C | 3/5 | 100 | $0.35 | $ 1.75 | 4/20 | $ 1.40 | 400% |
| TRMP | A | $ 20.00 | C | 3/28 | 50 | $0.45 | $ – | 4/20 | $ (0.45) | -100% |
| PTR | A | $120.00 | C | 2/27 | -10 | $2.60 | $ – | 4/20 | $ (2.60) | 100% |
| AAPL | A | $ 90.00 | C | 4/17 | 20 | $0.75 | $ 1.25 | 4/17 | $ 0.50 | 67% |
| CRZO | A | $ 30.00 | P | 3/19 | 20 | $ 0.80 | $ – | 4/20 | $ (0.80) | -100% |
| RIG | M | $ 85.00 | C | 4/16 | -20 | $2.20 | $ 1.50 | 4/17 | $ (0.70) | 32% |
| SPY | A | $141.00 | P | 3/30 | 200 | $0.45 | $ – | 4/20 | $ (0.45) | -100% |
| SII | A | $ 40.00 | P | 2/22 | 5 | $1.00 | $ – | 4/20 | $ (1.00) | -100% |
| SUN | A | $ 65.00 | P | 3/7 | 50 | $2.10 | $ – | 4/20 | $ (2.10) | -100% |
| TGT | A | $ 60.00 | C | 4/1 | -30 | $0.85 | $ 0.60 | 4/16 | $ (0.25) | 29% |
| TIE | A | $ 35.00 | C | 3/16 | -60 | $1.40 | $ 0.30 | 4/19 | $ (1.10) | 79% |
| TM | M | $130.00 | C | 4/16 | 50 | $1.25 | $ 1.65 | 4/20 | $ 1.50 | 120% |
| TSO | A | $110.00 | P | 4/17 | -100 | $2.60 | $ 1.50 | 4/20 | $ (1.10) | 42% |
| TSO | A | $110.00 | P | 4/19 | 30 | $1.50 | $ 2.20 | 4/19 | $ 0.70 | 47% |
| TSO | A | $110.00 | P | 4/20 | 30 | $1.70 | $ 2.75 | 4/20 | $ 1.05 | 62% |
| TXT | A | $ 95.00 | C | 3/16 | 16 | $1.15 | $ 6.90 | 4/20 | $ 5.75 | 500% |
| VLO | A | $ 55.00 | P | 3/9 | 300 | $0.24 | $ – | 4/20 | $ (0.24) | -100% |
| WM | A | $ 40.00 | C | 4/17 | -10 | $1.30 | $ 2.60 | 4/20 | $ 1.30 | 100% |
| XTO | A | $ 50.00 | P | 2/22 | 5 | $1.75 | $ – | 4/20 | $ (1.75) | -100% |
| YHOO | A | $ 30.00 | P | 4/17 | 100 | $0.35 | $ 1.90 | 4/18 | $ 1.55 | 443% |
| YRCW | A | $ 45.00 | C | 1/16 | 5 | $1.05 | $ 0.25 | 4/20 | $ (0.80) | -76% |
The remaining 72 open Short-Term positions have a ridiculous average gain of 124% due to massive gains of over 1,000% from BEAV, PTR and TIE. The more realistic gain on cash is a sensible 20% but once again we have too much weighting in the STP vs. the LTP so we’ll be looking to pare these down next week.
Our Long-Term Virtual Portfolio is in fine shape with 46 positions that have an average gain of 122% and a cash gain of 29% on 59 average days open. The cash gain is way down because we took a lot off the table this week. We closed out 16 positions with an average gain of 100% on 63 average days held with a gain on cash of 306%. This represented 60% of the LTPs total gains as we repositioned deep in the money calls from BA, FXI, SHLD and WFR:
| Symbol | Qty | Paid | Sold | P/L | % | |||||
| AIG | A | $ 65.00 | C | 3/16 | -12 | $2.85 | $ 2.50 | 4/16 | $ (0.35) | 12% |
| AMZN | J | $ 37.50 | C | 1/29 | 10 | $6.60 | $ 8.80 | 4/16 | $ 2.20 | 33% |
| COF | A | $ 75.00 | C | 3/16 | -20 | $3.30 | $ 1.90 | 4/16 | $ (1.40) | 42% |
| CAT | A | $ 65.00 | C | 3/5 | -20 | $1.75 | $ 2.50 | 4/17 | $ 0.75 | 43% |
| BA | J | $ 90.00 | C | 3/7 | 40 | $2.10 | $ 10.30 | 4/18 | $ 8.20 | 390% |
| CY | A | $ 20.00 | C | 2/26 | -5 | $1.00 | $ 0.70 | 4/18 | $ (0.30) | 30% |
| FHN | A | $ 40.00 | P | 2/27 | 30 | $0.80 | $ 1.60 | 4/18 | $ 0.80 | 100% |
| MOT | A | $ 17.50 | C | 3/16 | -35 | $1.25 | $ 0.60 | 4/18 | $ (0.65) | 52% |
| BA | J | $ 90.00 | C | 3/7 | 20 | $2.10 | $ 10.30 | 4/18 | $ 8.20 | 390% |
| SBUX | A | $ 30.00 | C | 3/19 | -14 | $1.50 | $ 0.50 | 4/19 | $ (1.00) | 67% |
| CAT | J | $ 60.00 | C | 11/6 | 20 | $9.80 | $ 17.80 | 4/20 | $ 8.00 | 82% |
| FD | A | $ 42.50 | C | 3/16 | -20 | $2.70 | $ 2.45 | 4/20 | $ (0.25) | 9% |
| FXI | J | $100.00 | C | 3/6 | 20 | $12.00 | $ 17.35 | 4/20 | $ 5.35 | 45% |
| LVS | A | $ 95.00 | P | 2/6 | -20 | $10.00 | $ 4.20 | 4/20 | $ (5.80) | 58% |
| SHLD | J | $190.00 | C | 11/11 | 10 | $16.15 | $ 32.75 | 4/20 | $ 16.60 | 103% |
| SNDK | A | $ 42.50 | C | 3/16 | -10 | $1.20 | $ 0.05 | 4/20 | $ (1.15) | 96% |
| WFR | J | $ 50.00 | C | 1/26 | 10 | $7.10 | $ 17.80 | 4/20 | $ 10.70 | 151% |
This is what we were waiting for after 2 pretty mediocre weeks as we treaded water with the markets. I said a couple of weeks ago, we wouldn’t care if it was up or down as long as we got a big move but up really is so much nicer!
Our stocks positions are expanding as we added DNDN, GOOG and KNOT last week, all of which we sold calls against with an average gain of 13% in that virtual portfolio (spreadsheets posted on member site).
We had some rough going with the $10K Virtual Portfolio as we took total losses in MRK and VLO as well as what may as well have been a total loss in TSO, which we rolled to May $105 puts. We closed out 12 positions out of 28 in a very active week as we started out behind and I made a lot of quick trades to catch up. I’m currently showing a total value of 12,358 after our first month and I’ll be leaving all the trades together (open and closed) so we can discuss them over the weekend. I’m looking to learn what is and is not working for people as this is a new approach for me.
Have a great weekend,
– Phil
