11:50pm (EST) Wednesday Night
There was a ton of action today in the market and it was a great day to be long. It’s been a busy week so let’s get to some of the action.
The Dow finished the day at 8,472 and the 175 pop puts us within spitting distance of 8,500. Just when you thought the bulls were dead. I echoed the “floor of support” at 8,250 for the Dow on Monday morning before the opening bell and the Dow closed at 8,300 that day. On Tuesday and Wednesday, the Dow hit a low of 8,239 and 8,246. Then we got today’s bounce. If it holds then it means we are reading the map right. So far, so good.
I also went on to say that for the S&P 500, support lies at 870 and 800. We got down to 888 for the S&P on Tuesday and today the index closed at 920. I got quite a few emails on the S&P 500 June 925 calls (JXDFZ, $1.10, up $0.25) today which was cool as some of you probably made some cash. I thought I was seeing things when I saw where they OPENED for 20 cents and hit a high of $2.60. Two sites confirmed this and I used the quote from CBOE (Chicago Board of Options) after seeing it in my OptionsXpress account:
Too bad we didn’t set limit orders, huh? I told you if you wanted to play the bounce these options would be hot and when I first looked at them this morning they were trading for $1.60. The options still have a huge spead (bid $1.15, ask $1.45). That is why I always stress limit orders folks because if you put in a “market order”, the market makers will scalp you.
Another trade that would have worked was Bed Bath & Beyond (BBBY, $31.08, up $2.69). I said last time out the company announced earnings the stock made a run from $25 to over $31. Today the stock opened at $30 and traded as high as $31.48. The July 30 calls (BHQGF, $2.00, up $1.24) opened at $1.15 and traded as high as $2.10. Just sayin’. That, and I constantly remind you that history does like to repeat itself when it comes to the market and certain stocks.
I talked about BBBY but I was more focused on the Imax (IMAX, $7.82, up $0.68) trades. We got some great entry prices if you did the trade(s) but the stock has a pattern of falling to $6-something and trading back up to $8, excuse me, $7.99.
The July 7.50 calls (IMQGU, $0.250, up $0.25) opened at $0.35 and at 10:10am they were at 60 cents. If you played these be careful not to give back your profits back and use stop orders. You could have easily made over 50% and rolled the profits into the September 7.50 calls (IMQIU, $1.00, up $0.15). I liked these the most out of the three call options I mentioned and they opened at 85 cents. By 10:10 they were at $1.10 and hit a high of $1.20. The December 7.50 calls (IMQLU, $1.55, up $0.30) also did well.
The stock hit resistance once again at $7.99 and its 52-week high is $8.28. If we get past those levels over the next couple of weeks the September 7.50’s will be money. For those wanting to get in, if we pull back, look to get in around $6.90.
The Bernanke testimony consumed most of my morning but it was good to see ol’ Ben taking the heat. That dude looked cool as a cucumber under pressure but almost cracked at one point. Still, the more he kept talking, the higher the market went.
Of course, one company/stock that kept getting mentioned over and over was Bank of America (BAC, $12.35, unchangd). The stock made it in positive territory by a penny after spending much of the day in the red. There wasn’t a rush to sell the stock as it held $12 which was a good sign. The November 15 calls (BYOKO, $1.04, down $0.01) look good down here at a buck.
Cisco Systems (CSCO, $19.03, up $0.42) rebounded back above $19 which was nice to see and Ford (F, $5.68, up $0.05). Monsanto (MON, $75.66, down $0.50) continued its slide as it fell to a low of $73.55. The July 75 puts (MONSO, $2.70, up $0.10) traded to a high of $3.90. That strangle trade I profiled was right on Q but it won’t be listed as an official trade in the portfolio results.
All-in-all we couldn’t have asked for a better day and let’s hope the trend continues into Friday. I’ll be back in the morning to let you know how we look heading into the open.