1:35pm (EST)
Give the bulls credit. They are trying like hell to push this market though resistance.
Despite a nasty jobless claims report, 2 out of the 3 major indexes have pushed through our price targets as both the Dow and S&P 500 have cleared our fence. All we are waiting for is the Nasdaq, which seems to have a pants leg stuck in the barbwire, to confirm the jailbreak.
The Dow has broken 11,000 as the index has traded to a high of 11,016 and will need to close above this level to give the bulls a clear victory this week. The index is currently up 56 points and is a smidge over 11K at 11,009.
The S&P 500 has busted through 1,160 and is up 6 points to 1,164 and looks to be headed towards 1,175 and possibly 1,200.
However, the Nasdaq is at 2,399, up 16 points but just cleared 2,400, earlier, as we were heading to press.
Here were our thoughts yesterday:
“There is a feeling that the release of Friday’s monthly employment report will sway the market one way or the other but we think 3Q earnings will likely set the stage for where the market is headed over the short-term. We also have an uneasy feeling with the world currency debasing race that is currently going on and the parabolic moves gold, copper and silver are making is mind-blowing but we believe there could be some surprises, good and bad, that will dramatically impact the market over the next 3 weeks.”
Well, so far so good. It’s easy to be bullish in a market like this and while we would turn bullish (short-term) if the 3 major indexes CLOSED above our price targets, we are also aware that it will be vital to carry some kind of put option protection going forward.
It’s hard for investors to remember the bad times when the good times are so good right now, but, it was only 2 years ago this week that the Dow dropped 18% in a week. In other words, the index fell nearly 1,900 points in five days.
There is a saying that “history repeats itself” and often times in the market or in certain stocks, a pattern or history is repeated. We aren’t saying history will repeat itself…all we are saying is in this environment, strangles and straddles option trades will be your BEST FRIEND.
The strategies involve the purchase of both a call and put option which allows you security as long as the market is volatile. Check. We have that folks. In other words, you don’t have to know which way a stock or the market is going to have to move. You want volatility and huge price swings. Check.
This weekend there will be a number of important events taking place concerning the world’s currency and the market will be closed Monday.
Next week, Intel (INTC, $19.51, up $0.11) will report earnings on Tuesday (after the bell) along with Fastenal (FAST, $54.64, up $1.94). FAST which will report BEFORE the bell and the 52-week high is $56.65. If the bulls are still dancing and the two companies get “A’’’s on their earnings report cards, then look for Dow 11,300; Nasdaq 2,500; and S&P 1,200 over the near-term.
If some unexpected news or event happens over the weekend, or if Intel MISSES Wall Street’s estimates, then the market could retreat back into the 4-month long trading range, or worse.
Either way, we think 3Q earnings season will be intense and loaded with some GREAT opportunities to make some money on both call AND put options. We plan on using a combination of both (strangles and straddles) but we will also be playing some directional trades straight up.
Remember, we teach these kind of option strategies in our new trading manual “How to Trade Options on Momentum Stocks” which is available NOW with a FREE 1-month membership included (a $129 value).
We will be releasing our first video this weekend for those of you have ordered our course. Details will be emailed to you and we plan to cover the upcoming earnings season and how to find trades, as well as an overview on strangles and straddle option strategies which are covered in our option manual.
Have a great weekend everyone and get ready for some action over the next 3 weeks!
]]>