Whee, this is great!
Any excuse to take the markets higher and INTC was a good one last night. We’re thrilled because my 2:43 Trade Idea for members was “INTC Jan $17.50s for $1.28, speculative naked call with earnings tonight.” We don’t do those very often but we looked primed for a pop and not much was expected from Intel, who were still expected to earn just 8 cents this quarter by the 44 analysts who are paid tofollow them, despite the fact that they earned .11 last quarter (an 8-cent upside surprise)and had earned .28 last year in Q2. That made the long call an excellent play since we were also willing to stick with them and add to the position if INTC had missed. As it is, that should give us a nice 50%+ pop this morning!
Other tradesideas from yesterday’s Member chat were a GS put spread, AIG puts (and we can’t wait for “earnings” on them!), DIA puts and calls as momentum plays, a YUM ratio backspread for the $5,000 Portfolio and a JPM bear put spread. So we weren’t overly enthusiastic in the run-up, mainly because we loaded up the truck in last week’s dip with 18 bullish plays that I reviewed in the weekend wrap-up. So we are looking for short plays to defend ourselves until we are sure what we have here is more than the proverbial “dead cat bounce” off our 33% retrace (which I discussed in Monday’s post). As I mentioned in yesterday’s post, ourupper targetsto break thedreaded head and shoulders pattern are: Dow 8,500, S&P 930, Nasdaq 1,825, NYSE 6,000 and Russell 510. We’re making good progress but nothing would be worse than failing this breakout and confirming thedownward pattern so it will still be a tough week to get through,especially with todays manufacturing data, which we are concerned about.
I think David Fry summed it up for the skeptic’s camp yesterday saying:
The AP headline today read: “Goldman Sachs’ $2.7B profit shows the firm’s prowess.” Good Grief! You have to hand it to Da Boyz, they know how to bedazzle Main Street. Anyone with a HAL 9000, their bad debts taken off their books, billions in public money to trade and most of their competitors (Bear Stearns and Lehman Bros.) eliminated should do just dandy. “Prowess”? My okole!
INTC did indeed have good earnings (if you throw out that pesky $1.8Bn monopoly settlement, of course) but they…
