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Market Bounces After Weak Open: SPX, Nasdaq, GS, V, MA, AXP, PRU, LFC, CELG, AMGN     

The market opened on the weak side this morning, continuing the slide from last Thursday.  We cashed out our call play on SKF for a +49% gain.  This trade was opened last Thursday and closed today:

July 02, 2009
12:04 | HappyTrading SKF ($44.20) Bought to Open SYJGR Jul 45 calls, at $2.35

July 06, 2009
07:41 | HappyTrading SKF ($46.10) Sold to Close SYJGR Jul 44 calls, at $3.50 +49%

Again, we got the day high on these July 44 SKF calls (this happens quite a bit with our trades, so, not a big surprise any more).  These options closed at $2.5, $1 below where we sold them. 

After cashing these out, I took the rest of the day off.  I commented in our Trading Room:

July 6, 2009 7:48 AM
good morning!

SKF
out for now... +49%

I'm taking the rest of the day off, as per my comment on Thursday[...]

VIX
intraday charts are getting a bit toppy; 30 is being tested right now....

market
although SPX is not quite yet 880, leader stocks are showing bottoms on their hourly charts. Things may go lower later today, so, watch for re-entries on the downside plays after intraday bounces (for quick trades). But, after 2 quick days of sharp drops, be a little more careful.


Apparently, the market did indeed start to bounce right after we sold our SKF calls; and, it just kept on going!  To my pleasant surprise, when I checked on the markets this evening, that SPX closed green!  I also mentioned in my Market Forecast this weekend that VIX could test 30.  VIX went above 30 this morning and was my cue for locking profits on "downside" plays.  VIX came back down to close at 29.

Financials led the bounce.  XLF (financials ETF) actually closed green!  GS added +2.07%.  Credit card stocks were strong following an upgrade on AXP: V +0.98%; MA +0.32%; AXP +5.61%.  PRU gained +2.26% and LFC hopped +3.79% on an upgrade.  Biotechs attracted buyers after some profit-taking last week:  AMGN +1.13%; CELG +1.26%; AMAG +1.87%; DNDN +4.26%.

The Dow ended up +44.13 points; SPX added +2.3 points; Nasdaq slid 9.12 points:

SOXX (semiconductors) led the techs lower, down 1.35%.  XME (metals and mining) slumped another 5.17% (discussed in this weekend's Market Forecast).  USO (oil) lost 3.72% (also mentioned in Market Forecast this weekend).  GDX (gold miners) fell 3.58%.  PBW (clean energy) dropped 4.75%.  FXI (Chinese ADRs) gained +1.95%.

SPX

SPX added +2.3 points to close at 898.72.  It tested the lower daily BB and bounced back.  The MACD went lower.

Nasdaq

Nasdaq slid 9.12 points to close at 1787.4.  Its 10-day MA went below the 30-day MA and the MACD was down.

Both SPX and Nasdaq closed below the daily MAs and their MACDs went lower.  Although today's bounce, after the morning weakness, was certainly encouraging, things still look a little weak.  We did see some bounces in the oil services sector (DO closed up +1.54%).  But, overall, commodity-related sectors are still weak.  Gold miners, especially, could break lower.  VIX tested 30 today, but, could not close above.  SPX 880 remains the nearest support.  If the market strengthens from here, biotechs should draw buyers back in.  On the other hand, commodity-related sectors could bring SPX to test that 880 level.

Good night and HappyTrading! ™


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