Thursday Wrap-Up: Strong Start, Stronger Finish

by: MyHappyTrading

Thursday's market started out strong and finished stronger. In the morning, both home sales and unemployment numbers were seen as favorable to the economy. Stocks charged higher and higher. Commodity related sectors came back up. GS led the financials higher, adding $5, or +3.11%.

We locked in profits Thursday on the way up. ISRG was a huge winner (+300% to +400%). I will write about the ISRG trade separately this weekend.

Other winners Thursday include JOYG, SOHU, and EDU:
July 23, 2009
11:59 | HappyTrading JOYG ($39.77) Sold to Close JQYHC Aug 37 calls, at $4.00 +74%
09:49 | HappyTrading EDU ($68.00) Sold to Close EDUHM Aug 65 calls, at $4.60 +64%
09:08 | HappyTrading SOHU ($65.55) Sold to Close TKZHM Aug 65 calls, at $4.50 +3%
06:46 | HappyTrading SOHU ($67.19) Sold to Close TKZHM Aug 65 calls, at $5.30 +21%

These trades were started on Monday this week.

In the Trading Room, just before the market close, I said:

July 23, 2009 12:44 PM
So I now think that the market is ready to take a breather... it all depends on how MSFT/AMZN/BIDU (maybe some other key earnings that I can't recall off-hand) report. If they report well, I think the market can still jump tomorrow morning and test SPX 1000. Then, profit-taking will likely start...

Well, after the market, MSFT missed the estimates; AMZN reported slightly better-than-expected results; and BIDU beat the expectations. But, it looks like MSFT's miss was enough to prompt profit-taking to start. MSFT fell 7%; AMZN dropped 6.39%; and BIDU slid 2.15%. Things have gone up so high, anything less than spectacular will likely not excite more buyers.

It does look like the market is ready for a breather. We have already cashed out most of our long positions Thursday and are sitting pretty mostly in cash. We should be looking for some quick downside plays. Given that today is Friday, things may be volatile. I don't expect the market to turn down sharply, but, there can be some "fast money" made on the downside.

I also commented on the solar stocks Thursday:

July 23, 2009 7:27 AM
Sideline money will need to just find a place to get in. So, what hasn't moved and can really move? Solars.

July 23, 2009 8:56 AM
FSLR at $160 it becomes neutral; that's likely where they'll take it before SPWRA earnings. If they push this above $160 and still leave room on the intraday charts, then [it is] more likely they have decided to drive this higher after SPWAR reports.

After the market, SPWRA delivered some nice quarterly results that crushed the estimates. SPWRA shares jumped almost +20% in after-hours trading. FSLR was up more than $5, trading above $160. So we should see strength in the solar stocks. Don't forget the Chinese ones: STP, YGE, TSL, etc.

The Dow finished up +188.03 at 9069.29 (above 9000); SPX added +22.22 points to close at 976.29; Nasdaq jumped +47.22 points to close at 1973.60.