8:30pm (EST)

The bears made a little noise last week as they took down two of the major three averages.  The Dow managed to escape with a gain of 47 points for the week and finished at 10,318.  The S&P was the big battle ground as the bulls were trying to hold 1,100.  They couldn’t as the index lost 2 points to close at 1,091.

The Nasdaq fell 1% as Tech cooled.  Blame it on Dell (DELL, $14.29, down $1.58) as Tech couldn’t get any momentum after the company’s lousy earnings report.  For the week, the Nasdaq fell 22 points and settled at 2,146.

We have been providing key resistance targets for the market and we broke through the top of those ranges this past week.  Last Sunday night in the Weekly Wrap, we said to watch 10,365 for the Dow and that was broken on Monday as the Dow gained 136 points to close at 10,406.  By Wednesday we had reached a high of 10,471.  The bears may have slowed the bulls’ momentum but we still think the Dow can run to 10,850.

The S&P 500 continues to flirt with 1,100 and spent much of the week above it.  The high was 1,113 but we closed above this level on Tuesday and Wednesday.  We are looking for a run to 1,200 but are watching 1,070.  A break below 1,070 could lower our expectations for a short-term rally.

We were looking for a close above 2,175 for the Nasdaq which we said could take us to 2,275.  The index reached a high of 2,205 and traded above 2,200 until Thursday.

As you can see, we are right below prior resistance levels and it will be interesting to see if this was a “top” for the market.  We still believe the market has one big push higher before we close 2009 and we will need to see 4Q earnings growth when companies report earnings in January.

We expected more fireworks on Friday since it was option expiration day but the bulls did well to hold their ground.  We do want to take a look at a couple of options though just to show you how fast they move.

Let’s start with Dell.  We had mentioned the company reported lousy earnings after the bell on Thursday but was there a trade there?  You bet.  The stock opened at $14.59 and the December 15 puts (DLYXC, $0.95, up $0.56) gained nearly 150% from Thursday’s close.  Of course, you would have needed to buy the put options before Thursday’s close.  However, these same puts opened at 83 cents and traded as high as $1.00 on Friday.  You could have made about 15% if you had day traded these options on Friday but they will double if Dell trades down to $13 by Christmas.

Dell is losing market share and we aren’t sure if the stock trades $13 which is why we haven’t made it an “official trade”.  Shares could find support here at these levels but we wouldn’t rush out to buy call options either.

The other stock we want to talk about is Priceline.com (PCLN, $208.75, up $1.11).  As you may know, we profiled the November 200 calls (PNEKA, $8.75) which expired on Friday on November 6th at $1.10 and we were out a week later for an average price of $6.25 by November 11th for over a 450+% profit.  Two days later, the stock had fallen below $200 and these options were WAY below our exit price.

The stock ended up running back over $200 and hit a high of $210 last week which means these calls traded as high as $10 again.  The point we want to make is that although we will leave a little on the table with some of our positions and cut our losses at 50% is because we take the emotion out of the trade.

Would you have really wanted to hold these options up until expiration?  Could you have slept at night with the way the market was acting towards the end of the week?

We are still in a trader’s market but we see some good opportunities both on the long side and on the short side.  Thanksgiving week is normally pretty bullish but the bears have the momentum.  However, the bulls have broken through resistance and have been pushing this market higher since March.  One thing is certain.  It ought to be another interesting week.

We will be back in the morning with the trade updates and a fresh outlook.  As we head to press tonight, Dow futures are up 30 and the S&P 500 futures are up 4.  Nasdaq futures are up 6…