12:30pm (EST)
We mentioned last week that today could be nasty as July options expiration day has favored the bears 70% of the time over the past decade. Despite some nice Tech earnings, the charts were showing a push to resistance this week after support held on Monday but we had a good feeling the top of the current 2 month plus trading range would hold.
News from overseas has been ignored for much of the week but Spain is causing the bulls some pain after saying it will apply for help from the new government fund. There are reports of a euro funding gap and the region of Valencia is trying to tap rescue funds already to help meet their refinancing needs. There were intense protest last night in Madrid as 100,000 people who are upset with the austerity measures and its only going to get worse before it gets better. Earlier this week, Greece said it would need an “emergency” loan of another 11 billion euros.
We will have some more thoughts on where the market is headed over the next few months on Monday but for now, the bulls and bears are still stuck in a trading matrix.
We do have some good news as we should have two more winning trades for our Weekly Wrap that has pushed our 2012 Track Record to 22-0 for the publication. We are 39-0 since the start of 2011. Arena Pharmaceuticals (ARNA, $9.44, down $0.21) will make us 117% while Solazyme (SZYM, $13.61, up $0.12) will give our subscribers a return of 11%. For those of you who feel covered call writing is boring, we constantly remind investors if you have 5 trades that make 20%, you will double your money.
We will have a full update for you over the weekend on all of our closed trades as we square up the books today. The July option cycle expires technically tomorrow, but the market doesn’t trade on Saturdays. The choppy trading environment has been nerve racking to say the least but we should still be at an 80% win rate for all of our trades. We were hoping to be near 85% but hitting on 8-out-of-10 trades for the year is still phenomenal.
Wall Street darling, Chipotle Mexican Grill (CMG, $311.32, down $92.54), is getting taken out to the wood shed after reporting disappointing earnings. Shares are down 23% and some of the talking heads are saying to step up to the plate and buy shares at $300. You might want to wait as we think there could be a test down to $250 which means put options might be a better alternative for now.
We are looking forward to our next new batch of option trades and we have several we really like right now. However, we may have to wait for confirmation of a run to new highs or a test back to the bottom of the trading range before establishing new positions.
The Dow is down 110 points to 12,832 while the S&P is lower by 12 points to 1,364. The Nasdaq is off 33 points to 2,932.
We will be back Sunday night with the Weekly Wrap and for those of you still haven’t subscribed to the publication, make sure you give us a try as we will be sending out a special 3-month coupon to join us over the weekend. Until then, have a great weekend everyone!