10:30pm (EST)

You could tell the bulls were in a buying mood last week after taking the major indexes over 2% higher.  The bulk of the gains came at the beginning of the week after the G-20 meeting said it would keep financial aid flowing until the economic recovery was back on solid ground.  The Dow was up 4-out-of-5 days and finished the week with a 247 point gain to settle at 10,270.

Last Sunday night in the Weekly Wrap, we said had this to say about the Dow…”Our near-term targets for the Dow remain 10,300-10,400 to the upside and 9,650 is short-term support.”  Well, the Dow reached a high of 10,357 and hit a high of 10,332 on Friday.  If the Dow can break 10,365 then we could looking at, get this…10,850.  If that were to occur then 10,300 would become solid support.  Lower support still remains at 9,650.

The S&P 500 gained 24 points, or 2.3%, for the week and closed at 1,093.  We mentioned the index was having trouble with the 1,100 level but did break the magical number twice last week.  It was a little concerning though that we could not CLOSE above 1,100 but we should this week if the bulls continue to push.  That could pave the way for a run to 1,200.  The bottom of the range is 1,000 and even down to 970.

The Nasdaq made the biggest gain as it surged double nickels (55 points, or 2.6%) to finish the week at 2,167.  We are looking for a close above 2,175 which could take us to 2,275.  Support is at 2,000-2,025.

As you can see we are right at the top of these resistance levels so we either break higher or we drift back down in our trading range.  As we head to press tonight, Dow futures are up 54 points which mean we are headed for a nice open on Monday if the overseas markets can hold their gains.

The US Dollar made a fresh 52-week low last week and kissed 74.77, its lowest level since August 2008.  This has kept gold in high demand as the yellow metal made a fresh 52-week high of $1,123.40.  We caught some of the gold rush as we went long Barrick Gold (ABX, $42.89, up $1.02) and netted our subscribers 38% in 2 days.  We aren’t sure how long gold stays hot but we wouldn’t be surprised to see $1,200/ ounce…

We have a busy Monday as far as economic news.  At 8:30am, we get the Empire State Manufacturing Survey and Retail sales numbers.  At 10am, Business Inventories are released.


MONDAY: American Diary (ADY, $32.43, down $2.42), Assured Guaranty (AGO, $21.66, up $3.56), Cellcom Israel (CEL, $30.76, up $0.10), Lowe’s Companies (LOW, $21.85, up $0.38), Perfect World (PWRD, $46.35, down $0.62), Sina (SINA, $42.42, up $0.27) and Zoom Technologies (ZOOM, $7.60, up $1.50).

We have a feeling Lowe’s might beat estimates and will report earnings before the bell.  The last time they reported the stock got hammered and we stayed on the sidelines.  There was heavy buying in the November call options.  Check this out.  These are NOT trades but we wish they would have been.

The November 22 calls (LOWKK, $0.65, up $0.26) jumped 67% on Friday while the stock gained just 2%.  Over 15,000 contracts traded.  The November 23 calls (LOWKL, $0.40, up $0.25) gained a whopping 166% and opened at 15 cents on Friday…volume was over 20,000 contracts.  Wow.

Before we go, we wanted to share some research with you on our trade results since we started the blog over 18 months ago.  Eric has been doing some number crunching on our 2008 and 2009 portfolios and even we started to blush…

Total Trades:  346

Winning Trades:  283

Losing Trades:  63

% Winners:  82%

% Losers:  18%

Win/Lose Ratio:  4.49

Average Winning %:  148.77%

Average Losing % Loss: -46.74%

% Profit  / % Loss Ratio:  3.18

***What is this means as that Rick’s gains on winning trades is a little over 3 times bigger than his losses on losing trades. In a nutshell, you could lose 3 times and win once, and you’d still be at a break even (excluding commissions of course.)  Most industry “gurus” are happy with 2-to-1…

If you are still waffling on a subscription we hope these results will ease your fears of option trading.  We have a number of new trades on our Watch Lists for this  week and if we can get a push higher we think these plays have triple-digit potential as well.

We will be back in the morning with the 9am update…