Negative news out of Europe continues to drag on the U.S. markets. In Greece, riots in Athens left at least three dead as citizens protested their government’s new, bailout-mandated austerity measures. Ratings agency Moody’s also sparked some selling after warning that it may downgrade Portugal’s government bonds.  The day’s upbeat employment data was a notable bright spot — particularly ahead of Friday’s nonfarm payrolls report from the Labor Department. Payroll processor ADP noted that private-sector employers added 32,000 jobs in April, which helped to lift the black cloud looming over the Street. On the heels of this report, stocks made a brief trip into the black around midday — but the major market indexes nevertheless ended their second consecutive session on a disappointing note. The SPX Index had been trading in a range between 1180 and 1220 for more than a month and the action within that range had gotten quite volatile as of late.  This week we have broken below the bottom of that range and that triggered a flood of sell signals.  The market did a decent job of rallying back ahead of the close today, but there was damage done this week.  There are plenty of bearish set-ups out there. In a nutshell, the breakdown below 1180 turned that level into resistance.  We’re going to struggle to break through that resistance and we wouldn’t be surprised if the new trading range becomes 1160-1180.  However, this is a temporary holding pattern and we think we’ll break back above 1200 in the not too distant future. In summary, we remain cautiously bullish and expect to be in this new trading range for at least another week.  A lot of things have to fall into place before we can break out of it. Optns5.51Weekly Economic Calendar: Thursday

  • Thursday brings the usual weekly initial jobless claims and the preliminary nonfarm productivity report for the first quarter of 2010. CIGNA Corp. (CI), Cincinnati Bell Inc. (CBB), DIRECTV (DTV), Dr Pepper Snapple Group Inc. (DPS), El Paso Corp. (EP), Fuel Systems Solutions Inc. (FSYS), SandRidge Energy Inc. (SD), Hyatt Hotels Corp. (H), MGM MIRAGE (MGM), Plains Exploration & Production Co. (PXP), Omnicare Inc. (OCR), Scripps Networks Interactive Inc. (SNI), Sara Lee Corp. (SLE), Warner Music Group Corp. (WMG), bebe stores inc. (BEBE), Blue Nile Inc. (NILE), Consolidated Edison Inc. (ED), Crocs Inc. (CROX), General Cable Corp. (BGC), Kraft Foods Inc. (KFT), Leap Wireless International Inc. (LEAP), and STEC Inc. (STEC) are scheduled to report earnings.


  • Friday closes the week with the government’s nonfarm payrolls report and the unemployment rate for April. Rounding out a busy week of earnings reports are CF Industries Holdings Inc. (CF), Edison International (EIX) and PG&E Corp. (PCG).

New Trade Idea: Buy Macys (M) May 24 calls @ $0.70 or better: Optns5.52 Retail remains hot and Macys has been the recent leader.  It was strong today despite a weak market.  Use $1.40 for a target and $0.35 as a mental stop-loss. Open Positions: Buy Boyd Gaming (BYD) May 12.5 Calls @ $1.05 or better: The gaming sector remains hot and Boyd is poised for a strong breakout to the upside here.  Let’s use $1.75 as a target and a mental stop-loss of $0.65 for downside protection. Las Vegas Sands (LVS) May 24 Calls @ $2.35: Earnings are tomorrow, 05/06.  Continue to hold.  Use $3.60 as a target and $1.00 as a mental stop-loss. PNC Financial (PNC) May 67.5 Calls @ $1.45: Continue to hold.  Use $3.80 as a target and $0.80 as a mental stop. Amazon (AMZN) May 135 Puts @ $ 3.30: We easily hit our target for a +100% profit!  Great Trade!