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What an amazing market! Like it or not you have to appreciate how bulletproof the market has been for more than a month.

The DOW, who we will now call Mr. Jones, shot up to 12,116, and the S&P followed suit flying through 1,370 to 1,377. The NYSE also made a new level at 8,736, and only the Nasdaq failed to make a new recent high at 2,355, despite Google's $21 gain.

The SOX did their part, gaining half a point but failing to break back over the 50 DMA:

Only the transports were a real disappointment, closing down a point after retesting the 200 DMA at 2,562.

Oil gapped down and stayed there, and it would have been a lot worse has it not made a miraculous 50-cent recovery between 1:35 and the 2:35 NYMEX close when someone just had to have oil at any price! Finally we can use Stockcharts again as it now properly reflects the true value of the current contract:

Oil Chart 24 10 06

Gold dropped a full 2.5%, rejected from that death cross just 3 days after I predicted it would happen! It took the slightest little bounce off the $580 mark but, as this loss came against just a .5% gain in the dollar, both oil and gold may have serious trouble ahead.

Gold Daily Chart 24 10 06

General Motors Corp. (NYSE:GM) was the star of the Dow today with a 5.7% gain ahead of earnings -- we'll see if it's justified tomorrow!

Credit default swaps are booming, that's a big bet against builders! "The increase in the index shows traders expect mortgage delinquencies and foreclosures to increase at a time when the number of homes for sale as measured by the National Association of Realtors is at a 13-year high. The percentage of home-loan payments more than 60 days delinquent rose to 7.23 percent in July from 5.9 percent a year earlier, the fastest rate of increase since 1998." Moody's Investors Service said Oct. 17.

"About 18 percent of all mortgages issued in the first half of the year were to borrowers considered most likely to default, such as those with high credit-card balances, up from 2.4 percent in 1998. Nine percent of all subprime loans made in 2006 may default within five years, the worst performance since at least 1998."

Lucky for us, it just doesn't matter!

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We picked up a few plays from our weekend list and a couple of items in comments:

  • PetroChina Co. Ltd. (NYSE:PTR) Dec $105 puts came in at $1.55
  • Marathon Oil Corp. (NYSE:MRO) $85 puts came in at just $2.45, but the $80 puts are too far away and too expensive.
  • America Movil SA de CV (NYSE:AMX) $45s gave us our $1 entry, and the Mexican stock market made a new high today, so we couldn't ask for a better springboard.
  • Amazon.com Inc. (NASDAQ:AMZN) Jan $30 puts got off to a good start as International Business Machines Corp. (NYSE:IBM) decided to sue them for patent infringement, but there was a buying frenzy and they finished at $1.45 (down 10%). The Nov $30 puts sold against half the position finished at .95 (down .15 and, after today, I'm very glad I got them). I could have gotten a lot more for them but I was greedy and didn't sell into the initial drop!
  • Amgen Inc. (NASDAQ:AMGN) did in fact have good earnings, but the $75s finished at $1.25 (down .20) before the $2 after-hours run-up.
  • American Express Company (NYSE:AXP) $55 puts were a good play on the earnings and are up a dime at .45. In comments I picked up the $57.50 puts at .80, which ran to $1.40 (up 75%) against the $60s for .35 (now .10). On what I hoped was a floor, I also picked up the $57.50s for .85 avg.
  • I got nervous Google Inc. (NASDAQ:GOOG) was going too far too fast, and sold the $470s against my shares for $22.
  • Gannett Co. Inc. (NYSE:GCI) pulled a nice 2.5% gain today on news of Tribune going private. The Jan '08 $55s are back to $8 (up 25%) while the Jan $65s are still .30 (up .10).
  • It was wise to stay out of Texas Instruments Inc. (NASDAQ:TXN) as they gave poor guidance and, despite solid earnings, the dropped 3% after-hours.
  • Netflix Inc. (NASDAQ:NFLX) caught me napping with a great quarter! They had a 50% earnings beat on 48% more revenues and guided up. I use these guys and it didn't occur to me (kick, kick).
  • Kraft Foods Inc. (KFT), as expected, was so-so with a penny beat and blah guidance.

Read all of Phil Davis's articles on Seeking Alpha.

Source: Options Trader: Monday Wrapup