We date options, we don’t marry them…
The market is getting punished today after getting some unpleasant economic news this morning. The jobless claims report wasn’t too bad…505,000 versus Wall Street’s forecast of 504,000, and slightly higher than the previous week’s 502,000, but the market didn’t like it.
The Conference Board’s index of leading indicators for October, month over month, was higher by 0.3% versus consensus 0.4%, and below the previous month’s 1.0%. Meanwhile, the Philadelphia Fed’s survey for November increased to 16.7 versus expectations of 12.0, and above the previous month’s 11.5.
As a result, the Dow is down 135 points to 10,290 while the S&P 500 is off by 17 to 1,092. The Nasdaq is lower by 41 points and is currently trading at 2,151.
Wednesday morning we said this:
“All things considering, and it may too early to tell, but these levels that we have been talking about being RESISTANCE for the Dow (10,400), S&P 500 (1,100), and the Nasdaq (2,175) have now become SUPPORT. Again, it’s too early to tell because the bulls are running fast this week.”
If you still don’t think we are in a trader’s market, think again.
This means you will have to have strict discipline and take profits when you can. For example, yesterday we were excited when Colgate-Palmolive (CL, $84.14, down $1.73) got hot right before the market closed. Most of our subscribers were looking at gains of over 200%. Some of them closed half of their positions yesterday and the other half this morning.
We had stops in place to protect a 100% return but many of you did better. This is the point we want to make. We have said we will put you in some really great trades and where you take your profits depends on you. If you followed this strategy then your return is more than the one we are going to show.
We went long on Tuesday morning because we felt the stock could make a run to $100 by January. The merger news with British household-product maker Reckitt Benckiser Group yesterday was unexpected but welcomed.
We didn’t close half yesterday because it looked as though the market was battling back at the close and we thought that momentum would carry over into today. If the futures would have been higher this morning then we doubt Colgate would have dropped as much as it did. It has and we had our stops in place.
Now, the stock could rebound but the parameters of the trade have change and although the merger has been denied it could be a drag on the stock. Then again, Colgate could go on to make a run at $100.
Who cares? We made over a 100% return and got out. We may revisit the trade and we will keep the stock and options on our Watch List. But for now, this trade is over.
Microsoft (MSFT, $29.94, down $0.17) just released some breaking news and said it Windows 7 sales have more than doubled any previous version during the same time frame. This has helped the stock rebound off its low of $29.70. We currently have an open trade on Microsoft and we like what the company is doing and saying. Heck, the CEO even said he was ready to roll up his sleeves and take on Apple (AAPL, $201.68, down $4.28). Easy big fella’, we are just hoping your stock can run to $32 by December 18th so we can double our money.
Current subscribers, please check the members Area for the trade updates. We were also stopped out of FedEx (FDX, $82.05, down $1.66) today.