Is the market back?  It certainly made a statement today as it regained the losses it incurred late in yesterday’s session.  Surprisingly it was he beaten-down energy sector that lead the charge, thanks in part to an unexpectedly bullish note for oil-spill villain BP plc (BP). JPMorgan reiterated its “overweight” rating on the stock today, arguing that the Gulf Coast disaster has not materially changed BP’s earnings outlook. Investors also enjoyed a solid report on housing data, with the National Association of Realtors (NAR) reporting a 6% climb in pending home sales for April.

For now the 1050 support level on the SPX seems to have held and all eyes will be on the 1105 level, which is the 200-day moving average.  The index struggled to get above it last week and that failure helped spark a sell-off.

We are seeing quite a few attractive bullish set-ups now and therefore our outlook has changed to slightly bullish and we will begin to pepper in some new bullish plays.

Options 6.21

Weekly Economic Calendar:

Thursday

  • Weekly initial jobless claims will be released, followed the ADP employment report for May, the revised first-quarter productivity report, April’s factory orders, and the ISM services index for May. Charming Shoppes Inc. (CHRS), Joy Global Inc. (JOYG), Suntech Power Holdings Co. Ltd. (STP), and The Cooper Companies Inc. (COO) are scheduled to report earnings.

Friday

  • Friday closes the week with May’s nonfarm payrolls report and May’s unemployment rate. Finally, Blyth Inc. (BTH) and American Woodmark Corp. (AMWD) will report earnings.

New Trade Idea:

Buy Thoratec Corp (THOR) June 45 Call @ $2.40 or better:

options 6.22

Thoratec is in a nice uptrend and in the beginning stages of a breakout.  We should see higher prices quickly.  Use $4.30 as a target and $1.20 as a stop-loss.

Buy Aruba Networks (ARUN) June 15 Call @ $0.20 or better:

options 6.23

The chart looks great and the stock is ready to make a move to new highs.  Use $0.55 for a target exit.  Because of the low-cost we won’t set a stop-loss until next week.

Open Positions:

Buy Wells Fargo June 29 Put @ $1.95 or Better:

Financials rallied late today.  If the stock looks strong at eh open tomorrow let the stop-loss do its job.  Continue to hold.  Use $3.00 as a target and $0.80 as a mental stop loss.

Sony (SNE) June 30 puts @ .90:

The stock was weak today on good volume.  It failed to participate in the rally.  Continue to hold.  Use $1.80 as a target to the upside and $0.45 as a mental stop-loss.