The market continues to hold this breakout level, but at times it appears to be on shaky legs.  The indicators remain positive and the argument could be made that we haven’t had many economic reports this week to give the market direction and leading to some routine profit-taking.  We’ll get plenty of reports over the last two trading sessions this week so that argument will be muted.

The SPX continues to hold up but has had difficulty breaking above the resistance at 1150.  We could see a break above that level as we enter into a new quarter next week.  In the meantime 1150 remains the resistance overhead and 1130 is the critical support that w must hold to the downside.

Either the market is setting up for a break to the upside or preparing for a sell-off.  We think with the new quarter coming, we will trend higher.  We remain cautiously bullish.

SPX Sept 29 2010

Weekly Economic Calendar:

Thursday

  • The report on new jobless claims will be released along with the latest look at second-quarter gross domestic product. Later in the morning, we’ll get a read on manufacturing activity in the Midwest when the Chicago purchasing managers’ index is released. Accenture Plc (ACN) and McCormick & Company, Inc. (MKC) will report earnings.

Friday

  • The Commerce Department will report on August construction spending, personal income and spending, and September auto sales, while the University of Michigan will give us a final look at consumer sentiment in September. The Institute for Supply Management will release its September manufacturing index. There are no earnings reports scheduled for Friday.

New Trade Idea:

Buy Lululemon Athletica (LULU) October 45 calls @ $1.80 or Better:

LULU Sept 29 2010

Lulu is breaking out on decent volume.  There is plenty of short interest in this stock and any significant pop will cause a short squeeze which will send this stock much higher.  Use $3.20 as a target and $1.00 as a mental stop-loss.

Open Positions:

JA Solar (JASO) October 8 Calls @ $0.65:

We hit our target for a +69% profit.

Visa (V) October 72.5 Calls @ $1.75:

Looks good.  Continue to hold.  Use $3.00 as a target and $0.95 as a mental stop–loss.

Research in Motion (RIMM) October 47.5 Put @ $1.95:

Continue to hold.  Use $3.50 as a target and $1.00 as a mental stop loss.

TEN Exclusive: Options Update – 9/29/10 is an article from:
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