5:30 pm (EST)

It seems the bears are starting to like Monday’s and today was no different. In what has been a common theme for the last few weeks, Monday’s have been lower as the bears try to get a jump start on the week. I would say they did a pretty good job today.

The market had no traction today and the mood was sour heading into the final hours of trading. I talked about the possibility of us switching gears from buying mainly call options to buying a few put options in the Weekly Wrap and it looks like we are going to need the protection.

The Dow fell hard today, dropping 290 points, and finished the session at 7,841. The S&P fell over 4%, or 37 points, and closed at 832 while the Nasdaq tanked 64 points, or 3.9%, to finish at 1,608. The closing prices for all three indexes are still above support but the straw that could break the market’s back is IBM (IBM, $100.43,down $0.84).

After the bell, the company said earnings had “slipped” but still beat Wall Street’s expectations. IBM said “currency fluctuations” had a drain on earnings, globally, despite improving gross margins. No matter how you slice it, this was not the news we were looking for.

In after-hours trading the stock is down $1.23 to $99.20 as I type. The stock has come off its lows and was down over $3 at one point. I had an uneasy feeling going into the close with this one and now I see why.

Things could get better by the morning and we will have to see where the May 110 calls (IBMEB, $1.10, up $0.07) open up at. We normally do 50% stops from our entry price so we will have to see where we end up at.

Rick Rouse