The first full week of trading is coming to a close and it sure feels good have the weekend coming up. After a couple of weeks with holidays, the market worked full-time this week and appears to be headed for a lower week. Wall Street has been hit with a barrage of news and we will take a look at the big picture over the weekend.
The interesting thing we got today was the jobs report which showed America lost a half million jobs. The unemployment rate zoomed to 7.2% in December, its highest level in over 15 years. Part-time workers wanting full-time work is another factor. Not only are people losing jobs, companies are also cutting hours and forcing some back into part-time work. The average work week in December fell to 33 hours, the lowest level in 40 something years.
Yikes.
The market has held up well though as the Dow has bounced off its lows and is only down 90 points to 8651. The Dow had fallen 140 points to below 8600 earlier in the session. The Nasdaq is down 27 points to 1589 while the S&P 500 has slipped 11 points to 898. Given the jobs number it could be a lot worse. The problem is there is no volume to help sustain the any rally…for now.
The good news is that our AutoZone (AZO, $133.18, down $2.68) trade has headed back in the right direction. The February 115 puts (AZONC, $3.30, up $0.30) are up 10% and I’m hoping we can get a break below $130 for AutoZone. That might take an act of Congress but the stock did break below $133…
Another stock that has been breaking down of late is Intuitive Surgical (ISRG, $103.54, down $7.00) which is rapidly approaching its 52-week low of $99.75. Sales are tanking. The stock opened at $109 and I like the February 90 puts (AXQNR, $4.50, up $0.90) at these levels. Option traders are also targeting the January 100 puts (AXQMT, $2.75, up $1.55) which opened at $1.50 and have been strong all day. These are a little riskier as the January options expire next Friday but they may run higher as Intuitive Surgical is in serious trouble. A break below $100 could spell disaster for the stock but would be great for these put positions.
As far as bullish trades, First Solar (FSLR, $161.39, up $6.03) has been acting strong and could be making a run to $175. I’m not a fan of chasing stocks higher but the January 175 calls (HJQAO, $2.25, up $1.00) could make a run to $3.00 if the stock can continue its run early next week.
DryShips (DRYS, $16.73, up $1.60) appears to be making a run to $20 but could fall back any minute. There is swift buying in the January 15 calls (OOCAC, $2.10,up $0.90) as over 6000 contracts have traded so far. They could also make a run to $3 if the stock can get to $18.
Rick Rouse
Rick@OptionsMentoring.com
