The stock market was very strong today, extending the recent rally as better-than-expected housing data brought new hope! There were plenty of high-flying stocks today. CME flew higher almost $30, or +15%!! GOOG added more than $15, +4.9%. BIDU jumped +8.71%. Some biotechs were very strong also: CEPH gained better than +9% as its drug Nuvigil met key study goals. AMAG advanced +9.45% on an upgrade by Citi as analysts looked ahead to the approval of AMAG's iron drug Feraheme possibly in the third quarter.
We did really well today, cashing in big profits in both CME +173% and BIDU +58% (see the trades HERE). I'd like to quickly go over the CME trade. We've been watching CME for over a week now:
CME (3-month Daily Chart)
As you can see, on 3/10, CME had a big jump and its daily MAs started to form a new "bullish" formation, with the 10-day MA above the 20-day MA above the 30-day MA. This caught my attention!! Then, for 4 trading sessions (from 3/11-3/16), CME fought with the resistance at $200 and traded in a very tight range. This morning, CME cleared $200 with a lot of room on the intraday charts (not shown here) to go higher. You can also see that there was not much resistance until $225!
This morning, I commented in our Trading Room:
HappyTrading
CME
looks strong...
I also called out the next resistance as a target:
CME
next resistance is at $225, lots of room to run if the market stays strong...
We got into March 200 calls in the morning at $5.5 per contract and exited as high as $15 per contract:
12:09 | HappyTrading CME ($214.00) Sold to Close CMECA Mar 200 calls, at $15.00 +173%
09:43 | HappyTrading CME ($209.80) Sold to Close CMECA Mar 200 calls, at $11.50 +109%
07:43 | HappyTrading CME ($200.50) Bought to Open CMECA Mar 200 calls, at $5.50
Even though I did think that CME has room to run to $225, I was being careful. The market started to get a bit unstable with only 1 hour left in trading. Things were getting toppy. So, I cashed things out. But, the panic buying in the last hour squeezed the CME much higher. How high? $224.36!! Just shy of my target of $225 today. These March 200 calls went as high as $24.5 and closed at $23.8!! In this volatile environment, with nearly +200% in profit, I had to take it.
So, the lesson here is that when you see something make a big move, keep it on your radar even if you missed the initial move. It is likely that there will be a second, or even a third, buying wave coming. Pay "extra" attention if the stock trades sideways for a few days. When the resistance level is finally broken, the stock is very likely to jump again! (This works on the downside too, by the way. Just check out our trade on Monday on APOL for a +105% gain!)
Let's take a look at the overall market. The Dow was up +178.73 points; SPX added +24.23 points; Nasdaq jumped +58.09 points:
XLF (financials) were strong again, up +6.49%; while HGX (housing) gained +5.65%. INX2 (Internet), SOXX (semiconductors), and BTK (biotechs) all added more than +4%. Miners were weak: GDX (gold miners) -2.18%; XME (metals and mining) -1.59%. USO (oil) advanced +4.21% and inspired XLE (energy) to go +3.45% higher. FXI (Chinese ADRs) advanced +1.48%.
SPX
SPX added +24.23 points to close at 778.12. It closed above the 30-day MA. Its MACD went higher.
Nasdaq
Nasdaq jumped +58.09 points o close at 1462.11. It closed above its daily MAs and the MACD continued higher.
In my Market Forecast this weekend, I said, "Above the 30-day MA, the resistance levels are at SPX 800 and Nasdaq 1500." This is where the market is right now, above the 30-day MA. The 10-day MA has turned up and the MACD is sailing higher. However, the market is a bit "toppy" on the intraday charts. We may need to see the market rest a little before deciding on its next move. VIX has come down to 40.8, and has a support at 40. If VIX breaks below 40, the market should test the above mentioned resistance levels.
Good night and HappyTrading! ™
