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Thursday Wrap-Up

Wow – a SOX rally!

Just what we always wanted! 

I wish I could get really and truly excited but I just don't see any real good reason for the sudden surge in SOX.   I really, really, REALLY want to forget my worries and enjoy the party but I'm just not drunk enough yet so the music still seems too loud and I keep looking out the window to see if the cops are coming and I'm worried someone is going to fall down and break something valuable in the living room.

The energy sector retraced about 2/3 of yesterday's losses and that's never a good reason to rally.  Neither is a sharp jump in the 10-year, back to 5.16%, filling the gap from last week and forming up for a possibly bullish break-out to last June's highs of 5.25% (it spiked at 5.32% last week when the Dow bottomed out at 13,275).  Trader Mike is calling today's action a "technical bounce" and I have to agree – there just wasn't much meat to it:

I said this morning it was all about the S&P and it was.  We held fast through the ups and downs as we waited for 1,520 to be broken but it turned out to be a weak break that came later in the day and we finished at 1,522, still 14 points below yesterday's open and just 9 points above yesterdays close.  45% is a nice start, but it's just a start and I maintain my 1,540 or BUST prediction for the week so anything less than an 18-point S&P gain tomorrow will have me going into the weekend with a bearish stance.

Today was another day where pretty much nothing worked, very annoying after yesterday when pretty much everything worked but at least today the markets were up and down often enough that we got to exit pretty much where we came in.

I made a very good bottom call at 10:17 to roll the DIA calls, which were up .50 by the end of day but also needed to be covered into the close (very fickle).   

The best news of the day was a better than expected Philly Fed report, the last bit of data for this week (but next week we get a ton of it!).  Employment dropped off and orders were way up while prices paid stayed under control – on they whole it was another "Goldilocks" report from the Fed, who seem to have nothing but happy, happy news in pretty much everything they put out these daysI, for one, feel priviledged to live in a land where our government isn't afraid to tell us how great everything is, despite all empirical evidence to the contrary

I went back to making an Iron Condor on Google and that's never a good thing when we can't find a better play than that but perhaps things will shape up into earnings next month.  The Google play ended up like this:

5 AUG 490.00 GOOG PUT (GOPTK) $ 4,910.00 6/22/2007 $ 4,800.00  
$ -110.00 -2.2 %
-5 JUL 510.00 GOOG PUT (GOPSU) $ 6,300.00 6/22/2007 $ 6,490.00  
$ 190.00 2.9 %
-5 JUL 510.00 GOOG CALL (GOPGU) $ 9,400.00 6/22/2007 $ 8,990.00  
$ -410.00 -4.6 %
5 AUG 530.00 GOOG CALL (GOPHW) $ 7,660.00 6/22/2007 $ 7,800.00  
$ 140.00 1.8 %

That's not bad for a start.  The play put $2,880 in our pockets but carries a risk (and margin requirement) of having to pay our caller as much as $10,000 but, since we have a one-month time advantage, the hope is that our 2 positons will maintain more than $20 of combined value regardless of the earnings outcome.  We may add to one side or the other as the stock moves up and down over the next 30 days and we will likely take July outside covers just before earnings (especially if we end up with 20 or so of these!).  This will be fun and educational to follow so we'll keep tabs on it!

We started the week with our tide analogy and the market has certainly been washing over us in waves this week but an objective observer might look at this chart and say the tide is receding just a bit.  Does this represent the crest of a wave that's about to break or just some minor pullback before a fresh attack at new levels?

Tune in tomorrow – it should be a fun end to an already interesting week!

 


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  1. to all who responded to my earlier plea
    thedraz, optrader, gordo, doubleclick, kc, others, and phil:

    thank you for all of your kindness and wisdom. it’s made a strong impression on me.

    i’ve been trading for several years now, at first very successfully, the last year very unsuccessfully, though it has become my primary focus. it has begun to affect me negatively in other ways now, and i’ve been avoiding facing that reality for some time. but i don’t want to ignore that any longer.

    i’ve got a bunch of open positions, so i will continue to be involved, but wish to step back, at least for a while. i love it, but it feels like a bad relationship right now. i learned how not to do that in my personal life quite a while ago, and i need to expand that wisdom to this. it’s an odd analogy, yet feels true.

    my concern is how to monitor what’s still open, without being drawn in to such a large extent. when i have my funds invested i feel a need to ‘monitor’ them constantly. how do i pay attention part-time, or just a little? i’m not sure. that’s my immediate dilemna and goal right now. if i can manage that, it can be a base from which to rebuild. my spirit as well as my finances. advice is welcome, and in order to keep my personal issues off the board, you can feel free to email me at: jjjuuulll@gmail.com if so inclined.

    the breath of wisdom and sense of community i have stumbled upon at your site phil, is astounding. i consider myself lucky to be here.

    yours, windy