12:50pm (EST)

Man, we love our job.

If you are an option trader or follow the market then you know what we are talking about.  Not many people look forward to going to work on Monday mornings let alone every day but we do.  Sure, we love our weekends and sometimes the market can drive us nuts, but when you can get inside the market’s head then it is the best feeling in the world.

We have been telling you that you can make money in down markets and that 90% of the investing public does not know how to short stocks or buy put options.  But if you do, then you are calm and ready and your palms are sweaty from all of the action.

We mentioned Sunday night in our Weekly Wrap that we were expecting the sell-off to continue and we really couldn’t wait to get the week started.  We are going to quote a few things because as an option trader it’s important to follow you trading plans and the map you have laid out. 

This is all part of us teaching you how the market works and how to find your own trades.  As you know, our Trading Manual is going to be launching in June and we have a lot of other projects in the works so we are not “bragging” although we are giving ourselves a pat on the back.  So let’s get to the market news:

The market continues to freefall as fears on Europe’s debt crisis and an increase in jobless claims have caused the mud to hit the fan.  As we go to press, the Dow is down a whopping 281 points, or 2.7% to 10,162.  Here were our thoughts on the index Sunday night:

“Remember, Dow 10,800-10,900 was support when the market was moving higher so now it becomes resistance.  On Wednesday, we said the Dow could “stretch” this level but that we believed the blue-chips could test 10,200-10,250, after stalling.  A break below these levels could easily push the index back below 10,000.”

We are right at those levels and the boat is tipping towards sinking below 10,000.

The S&P 500 is down 32 points, or 2.9%, to 1,082 and our near-term target was 1,075.  Bingo, the S&P has broken right through its 200-day moving average like a hot knife through butter. 

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The Nasdaq is plunging 74 points, or 3.2%, and is at 2,224.  We had a bulls-eye right at 2,200 and we mentioned if this level was broken that 2,000 would come into play.

Now that we have reached our first set of targets we are locking in profits on a lot of trades.  Although the trend is lower this market will continue to produce wild price swings as there is blood in the streets and oil in the water.  As we lock in profits our Watch List will be filling up with trades to take advantage of the next major move which should be lower.  However, we do have 1 NEW TRADE today!

We will be back in the morning with another full update but for now enjoy the gains and go to the Members Area for the trade!