The roller-coaster ride continues as the market struggles to put together consecutive days of strength. The SPX has bounced off of the 1040 level a few times so we have to use that as a confirmed short-term bottom. We expect to see that level tested again at some point tomorrow. 1105 is the high-end resistance. We are getting oversold readings making a bounce possible, but not likely from our viewpoint.
Our indicators are beginning to signal that a bounce is imminent but we think we’ll test the 1040 level one more time and if it holds we should get a healthy bounce. We remain slightly bearish and will continue to position ourselves that way.
Weekly Economic Calendar:
Thursday
- The initial jobless claims, the April trade balance, and the May Treasury budget will be released. Del Monte Foods Co. (DLM), Lululemon Athletica inc. (LULU), and National Semiconductor Corp. (NSM) will report earnings.
Friday
- The week closes out with May retail sales, the preliminary University of Michigan consumer sentiment report, and April business inventories. There are no major earnings scheduled for release.
New Trade Idea:
Buy Overstock (OSTK) June 20 Put @ $1.00 or better:
The stock failed to hold its 50-day moving average and we should see a quick move down to the $19 level. Use $1.80 as a target and $0.45 for a stop-loss.
Open Positions:
Vmware June 70 call @ $2.00
The volatility was too much for our calls and we were stopped out.
Aruba Networks (ARUN) June 15 Call @ $0.20
Let’s give ARUN a few more days. Use $0.55 for a target exit. Because of the low-cost we won’t set a stop-loss until next week.
Sony (SNE) June 30 puts @ .90:
We hit our target for a smooth 100% profit. Nice Trade!!
