What a way to kickoff a new month.  The Dow put August and its three-week losing streak in the rearview mirror and kicked off the month of September with a solid three-day rally. The Dow added 2.9% last week, and is back in positive territory for the year.

How bad was August? When the month ended on Tuesday, the Dow finished down 4.3% for the month. The S&P 500 fared even worse, stumbling to a 4.7% loss, while the Nasdaq did even worse with a 6.2% drop. All three indexes turned in their worst August performance since 2001, and their first negative August in five years. The Dow snapped the three-week slump amid the faintest hints that double-dip fears are overblown. We got better-than-expected reports on jobs, home prices, manufacturing and consumer confidence, along with renewed signs of strength in China and Australia. But don’t break out the rally hats quite yet. The Dow is still trading well within its summer-long trading range.

We managed to fight all the way back and close above the psychologically important 1100 mark on the SPX.  We bounced off of support at 1040 and roared 60 points in a few days.  Short-covering certainly played a big part of the move.

We are watching the 1115 mark as a key resistance level to the upside, a move through there and we could see 1130 very quickly.

In the short term we expect some more volatility and quick moves in both directions.  We expect to see a range of 1090-1115 for the next week or two.  Be patient and let’s see how the market accepts last weeks rally when we return to more normal volume levels.

SPX Sep 5 2010

Weekly Economic Calendar:


  • The market is closed for the Labor Day holiday.


  • There are no major economic reports scheduled for release. Casey’s General Stores Inc. (CASY), Navistar International Corp. (NAV), The Pep Boys (PBY), and Phillips-Van Heusen Corporation (PVH) are scheduled to report earnings.


  • The Fed’s Beige Book for September will be released, along with the usual weekly report on U.S. petroleum supplies. Ciena Corp. (CIEN), Smithfield Foods Inc. (SFD), The Talbots Inc. (TLB), The Men’s Wearhouse Inc. (MW), Shanda Games Limited (GAME), and Shuffle Master Inc. (SHFL) will post their quarterly results.


  • The weekly report on new jobless claims, along with the trade balance report from the Commerce Department will be released. National Semiconductor Corp. (NSM) and Smith & Wesson Holding Corp. (SWHC) will report earnings.


  • There are no major economic reports scheduled for release. Brady Corp. (BRC) and lululemon athletica inc. (LULU) will round out the week’s earnings.

New Trade Idea:

No new trade idea today due to the market holiday tomorrow.  We’ll be back Wednesday with new trades.

Open Positions:

Las Vegas Sands (LVS) September 29 Puts @ $1.20:

This position has been closed.

Research in Motion (RIMM) September 42.5 Put @ $1.55:

Continue to hold.  Use $3.00 for a target and $0.85 as a mental stop-loss.

TEN Exclusive: Options Update – 9/5/2010 is an article from: