9:00am (EST) All aboard! The bulls are determined to take this market higher and showed up Monday ready to run. The market’s momentum continued higher yesterday as all three indexes finished with gains of more than 1%. Believe it or not, the higher close put the Dow in positive territory for the year and the S&P 500 reached a new high for 2009. Of course, that pales in comparison to the Nasdaq which had its 9th straight higher close and is now up an incredible 21% for the year. And guess what? Futures are pointing towards a strong open. Dow futures are up 50 while the S&P 500 and Nasdaq futures are 3-5 points higher. News that Caterpillar (CAT, $36.65) beat Wall Street’s expectations is giving us the early morning pop. In fact, CAT is up $4.60, to $41.25, in pre-market trading. DuPont (DD, $28.33) and Merck (MRK, $27.94) also reported this morning. Both companies reported a drop in their quarterly profits but…they still beat Wall Street’s forecasts. Both companies are part of the Dow and both stocks are at $29 in early trading. I set some pretty aggresive targets in the Weekly Wrap on Sunday night – Dow 9,000, Nasdaq 2,000 and for the S&P 500 I threw out 1,000. Earnings have largely exceeded expectations and these targets are where the bulls want to go. Only two things can happen. Either the bulls are taking us to new highs or the bears are setting up one mother of a road block. I listed some stops for the IBM (IBM, $116.44) August call options yesterday and although I don’t think we are in any danger of hitting them, I wanted to talk about managing the position. The August 105 calls (IBMHA, $11.70) were profiled at $3.40 and stops are set at $10.00-$10.50. What that means is you could sell half the position at $10.50, then the other half at $10.00. This would allow you to keep some of the position open in case one stop is hit. The August 115 (IBMHC, $3.50) calls were profiled at $1.05 and stops are set at $2.50. You can make the stop $2.25-$2.50 to reflect the same strategy. Of course, IBM should roll with the open but that is not always the case. Yesterday, the stock started off lower before resuming its uptrend. I don’t think we are in any danger of getting stopped out anytime soon but I wanted to show you how you can use different little “tricks” to squeeze the most out of your profits. Rick@MomentumOptionsTrading.com]]>
