Another solid week of work put in by the Dow as it managed to extend its September rally for a third week and closed above the 10,600 level, which surprised most market watchers. It’s not that the SPX has broken out that has us somewhat excited, rather the fact that it’s building a bit of a supportive base here is bullish. The market spent most of the week in a narrow band near the top of its summer-long trading range. It’s very encouraging that we have not seen a sell-off despite some rather sublime economic numbers.
We are in a trading range from 1020-1030 here and we think the odds are growing that we will break out above the 1131 level of resistance this week. We do have decent support below in the 1110-1115 range. We are susceptible to quick and sharp sell-offs at this time bit we could see a sharp short-covering rally once we break above the 1131 level with conviction.
We enter this new week moderately bullish for the very short-term.
Weekly Economic Calendar:
Monday
- The National Association of Home Builders will release the September housing market index. Discover Financial Services and (DFS) and Lennar Corp. (LEN) will report earnings.
Tuesday
- The Commerce Department will release August data on housing starts and building permits before the market opens. The Federal Open Market Committee will weigh in shortly after 2 p.m. with its decision on interest rates. AutoZone Inc. (AZO), ConAgra Foods Inc. (CAG), Adobe Systems Inc. (ADBE), Cintas Corp. (CTAS) and Darden Restaurants Inc. (DRI) are scheduled to issue their quarterly reports.
Wednesday
- The weekly report on U.S. petroleum supplies will be released. Scheduled to report earnings are CarMax Inc. (KMX), General Mills Inc. (GIS), Bed Bath & Beyond Inc. (BBBY) and Red Hat Inc. (RHT).
Thursday
- The report on new jobless claims will be released. Later in the morning, we’ll learn about how many existing homes sold in August, and the Conference Board will unveil its leading indicators index for August. Rite Aid Corp. (RAD), Nike Inc. (NKE), and Saba Software Inc. (SABA) will report earnings.
Friday
- Durable goods orders for August and new homes sales for August will be released. KB Home (KBH) will release earnings.
New Trade Idea:
Buy Ivanhoe Mines (IVN) October 20 calls @ $1.45 or Better:
Gold has been hitting new highs and doesn’t appear to be running out of steam. IVN looks good technically and we should see a continued move toe the upside. Use $2.10 as a target and $0.90 as a mental stop-loss.
Buy Whirlpool (WHR) October 75 put @ $3.65 or Better:
Whirlpool had a decent bounce on Friday but that brought it right up against its 20-day moving average which has acted as strong resistance for quite some time for this company. Use $6.60 as a target and $2.20 as a mental stop-loss.
Open Positions:
Wells Fargo (WFC) October 26 Call @ $1.20:
Continue to hold. Use $2.10 as a target and $0.70 as a mental stop loss.
Sandisk (SNDK) October 39 Call @ $2.55:
Continue to hold. Use $4.70 as a target and $1.45 as a mental stop-loss.
Netflix (NFLX) October 130 Put @ $3.60:
Continue to hold. Use $7.00 as a target and $1.85 as a mental stop-loss.
TEN Exclusive: Options Update – 9/19/10 is an article from: 
