The bulls are pushing the market higher after a rosy report from the government said exports (up 3.2%) reached a 15-month high in March. The talking heads are reminding us gold continues to hit new highs and the euro continues to stink which is helping gold reach those record highs.
At midday, the Dow is showing a triple-digit gain of 107 points, or 1%, and is at 10,855. The S&P 500 is at 1,166, up 10 points, or 0.9%. The Nasdaq is flexing its muscles as it is higher by 34 points, or 1.5%, and is currently at 2,410.
Financial shares are mixed with Morgan Stanley (MS, $27.58, down $0.80) leading the losers lower. Shares are taking a hit after reports surfaced that the investment bank is facing an investigation into its dealings in mortgage securities. Federal prosecutors could bring charges any day.
Baidu (BIDU, $76.55, up $5.13) is at lifetime highs after a 10-for-1 stock-split. We normally don’t trade options on stocks that are over $150+ because the premiums are priced pretty high and we normally like to keep our trades under $2 per contract.
Of course, there are triple-digit strike prices under $2 but often times they are so far out-of-the-money that the stock would need to make a massive move which can and does happen. We have traded some of the higher priced premiums in the past but not on a $700 stock.
We are more comfortable trading options on stocks under $100 and now that Baidu has granted our wishes with a stock-split we can add it to our Watch List as a possible trade down the road. Splits are usually bullish as shares tend to gap higher afterwards.
Our Watch list continues to grow as we expect the market to fade at the close today. While today’s action is nice if you are a bull, we still think the market heads lower from here. Next week is option expiration week which will only add to the volatility.
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