Stocks traded lower today, as rumors of a milder-than-expected economic intervention by the Federal Reserve made the rounds. The Wall Street Journal reported that Fed officials next week are likely to unveil a plan to buy “a few hundred billion dollars” in government bonds over the course of three months. Sounds like a lot, but investors have been hoping that the Fed would buy at least a trillion dollars’ worth. The Journal explained that the Fed is simply trying to keep its options open. Not even stronger-than-expected reports on durable goods orders and new home sales could spur the bulls on today.
We have seen support on the SPX around the 1172 level tested a few times this week and each time the level has held and the market has bounced. We certainly feel more comfortable when we’re testing resistance rather than support. We think that we will remain in this trading range between 1170 and 1185 until the mid-term elections pass next week and until we hear more definite plans form the Fed.
We remain bullish but we will lighten up on our calls and we will be prepared to be nimble over the next week.
Weekly Economic Calendar:
Thursday
- The Labor Department will release the weekly new jobless claims figures. Meanwhile, 3M Company (MMM), Avon Products Inc. (AVP), Colgate-Palmolive Co. (CL), Exxon Mobil Corp. (XOM), Motorola Inc. (MOT), Potash Corp. of Saskatchewan Inc. (POT), and Microsoft Corp. (MSFT) will report earnings.
Friday
- We round out the week with an advance look at third-quarter gross domestic product, October’s Chicago purchasing managers’ index, and the final reading for the October University of Michigan consumer sentiment index. Arch Coal Inc. (ACI), Chevron Corp. (CVX), The Estee Lauder Companies Inc. (EL), Merck & Co. Inc. (MRK), and Sony Corp. (SNE) will report earnings.
New Trade Idea:
Buy Goldman Sachs (GS) November 160 Calls @ $4.15 or Better:
Goldman managed to secure a close above $160 today and we think this is the beginning of a breakout from this recent consolidation. Use $7.00 as a target and $2.50 as a mental stop-loss.
Open Positions:
Oracle (ORCL) November 28 Call @ $0.90:
Continue to hold. Use $1.65 as a target and $0.45 as a mental stop-loss.
Buffalo Wild Wings (BWLD) November 50 Call @ $2.30:
This position has been closed.
Juniper Networks (JNPR) Nov 30 Calls @ $1.80:
Continue to hold. Use $4.00 as a target and $.90 as a mental stop loss.
Broadcom (BRCM) November 37 Calls @ $2.10:
Target hit for a +67% profit!!
TEN Exclusive: Options Update – 10/27/10 is an article from: 
