The market powered higher on Monday following news that President-elect Obama will increase infrastructure spending to lift the economy once he takes the keys to the White House. The Dow blasted though the all-important 9,000 barrier but closed slightly below this level. Still, its 300-point gain to 8,934 put the Dow at its highest level in a month.
The Nasdaq was the clear winner though as the index jumped 62 points, or 4%, to 1,571. Technology may not be leading the way in today’s market but history shows never count the sector out. The S&P 500 advanced 33, or nearly 4% as well and finished at 909.
Some of the noticable movers from Monday’s trading session included Alcoa (AA, $9.58, up $1.43) which zoomed 17% while Caterpillar (CAT, $42.42, up $4.16) gained over 10%. The economic stimulus was welcomed news to the bulls as will put 2.5 million people back to work by 2011.
The Alcoa January 10 2009 calls (AAAB, $1.20, up $0.55) were up 85% and the Caterpillar January 40 calls (CXJAN, $4.80, up $2.15) were up 80%. The December call options for these two companies did way better of course but there was heavy buying in the aforementioned options.
Ford (F, $3.38, up $0.66) and General Motors (GM, $4.93, up $0.85) didn’t quite make it back to their morning highs but were making a run at them when word leaked that the government was making progress on a $15 billion bailout package which could be approved as early as Wednesday.
Let’s see if the Dow can hold 9,000 before we get too bullish.
Rick Rouse
Rick@OptionsMentoring.com
