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Celebrate, run for cover, rejoice, panic, buy, sell! Must be a Fed day... There is certainly lots of reason to celebrate –- Oracle, as expected, made it back-to-back great quarters as it turns out things are great in Techland (but shhh –- it’s supposed to be a stealth rally!).

Asia was strangely mixed after the Oracle Corp. (NYSE:ORCL) news with the Nikkei pulling back and the Hang Seng surging ahead. The Thai markets are closed for a coup, but India and Pakistan also seem to have no problem with it as their markets gain a point.

Toyota Motor Corp. (NYSE:TM) is, of course, concerned about sales in Thailand, as they are number one pretty much everywhere. But I am now looking to buy TM on any dip until they do something silly like buy out GM or Ford. Since TM seems determined to crawl along it’s 200 DMA as it slowly takes over the world, I’m accumulating the Nov $110s for $2.50 or less and the pre-roll Jan $115s for $2.50 or less.

Fun Fact: This is Thailand’s 18th coup since 1932!

Europe is in a merrier mood in despite DCX troubles as the EU clears Toshiba to buy Westinghouse (a deal which has good fallout for General Electric Co. (NYSE:GE)). Get it, fallout! That was a good one...

We are back to looking for breakouts, and today and I will not be too excited if we don’t hit some new levels. Fed days are very, very scary and we have plenty of time to buy if we start heading up. I’m a lot more worried about a downside than I am about missing out on something.

Lets look for Dow 11,600, S&P 1,325, NYSE 8,400 and Nasdaq 2,250.

Oracle alone added $10B in market cap in the overnights. This money has to come from somewhere, so expect some real leadership movements today.

Oil continued down in foreign trading as an extensive interview with Iran’s Ahmadinejad allowed him to come across as a fairly reasonable fellow. Oil may test $60 today on another inventory build, but this will not stop some people from buying oil companies “on the dips” -- so let’s keep a look out for bargains among our usual suspects.

Quote of the day: “The market can stay irrational longer than you can stay solvent.”

Gold has no reason to go up and there will be continued demand for dollars which should keep pressure on all commodities, but beware a swift resolution in Thailand, along with a gentle Fed, squelching demand for dollars.

Today's Picks:
I really am not keen on taking new positions ahead of the Fed and, as evidenced by yesterday’s extensive list, we still need to lighten up, so I’m going to be trading some tired horses for fresh ones as we rally around the far turn of this market.

  • If Reynolds American Inc. (NYSE:RAI) has trouble breaking $65, it’s a long way to the 200 DMA at $54! Expectations are high for Q3 (45% beat on last year against same sales), and I think analysts may have out thought themselves on this one. The stock is up 66% in 12 months but has been losing momentum. Nov $62.50 puts for $1.30 can be entered slowly, as we may test $65, and we can always play other brackets depending on the movement. This is a vote Democrat kind of play -- as even the Republicans are getting tired of supporting big tobacco.

Fun fact: Altria (NYSE:MO) spent $13.6M on lobbying in 2005. That’s about $20k for each and every member of the House and Senate. Who says you can’t buy good government?

Capital One Financial Corp. (NYSE:COF) has low-bar earnings at $1.79 vs. $1.81 last year, and they have been beaten up all year as they try to digest North Fork Bancorporation Inc.
(NFB), and this is another one of those deals where no one knows how to read an earnings report as the company took $79M in charges to build-up reserves and write down servicing income in the UK operation.

  • I think the amount they are saving by cutting back on commercials alone is enough to put Q3 over the top, so I like the $80s for $.65 and the Dec $80s as a pre-roll for $2.05. They have a test of the inverted 50 DMA at $77 coming up, so accumulate with caution -- if they bounce back down it’s a whole new ballgame. As to North Fork Bancorporation, Inc.
  • (NFB) -- you try buying a house in their market, there is no major slowdown in NY Metro to date and an upside surprise from North Fork could also boost Capital One.
  • AFLAC Inc. (NYSE:AFL) has nice low-bar earnings in a good environment. Analysts have been flipping up on them all year, but the stock is still dogging its sector by a wide margin. I like the Oct $45s for $.60 because I don’t want to be tempted to hold them for earnings (10/24) anyway.
  • According to many comments I’ve been getting this week, it is OK for ExxonMobil Corp. (NYSE:XOM) to charge “whatever the market dictates” because it’s the American way, but H&R Block Inc. (NYSE:HRB) gets raked over the coals just because there were “a few hidden fees.” I’m betting that they probably shouldn’t have lost $3B in value, and that sometime between now and April some savvy investor will notice it’s tax season again, so I’m looking at the Apr $22.50s for $1.55. You can sell the Jan $22.50s for $1.05 for a very cheap calendar spread but I’d wait until it tests the 50 DMA at $22.25, if at all.
  • Wow, I have no play on The Home Depot Inc. (NYSE:HD) or Lowe's Companies, Inc.
  • (NYSE:LOW) anymore! HD is a better company in a better spot with the Nov $37.50s at $1.55, but LOW Jan $31.25s are not so bad at $1.20. We get a ride to the low-bar earnings in early November, but watch the homebuilders for a sell signal. Remember, there still might be a hurricane!
Source: Options Trader: Wednesday Morning Ideas