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Well that was a nice week's rest wasn't it? Mr. Jones reasserts himself, wiping out 6 sessions of losses in one fell swoop but stopping just over the 12,100 line in a very impressive outing.

Who would have thought that could happen? Oh yes.... me!

Those Diamonds Trust Series 1 ETF (DIA) Mar $121s are already $4 (up 20%) and, of course, there was no reason to take the puts on today's action.

Of course, had I really known it would take off this quickly, I would have gone for the current $121s, which doubled today from .45 to .90 but I was still concerned about pre-election jitters (but I guess I'm the only one).

It seems the virtual assurance of a Democratic House with the Republicans maintaining control of the Senate is just the kind of hopeless two years of gridlock that investors have been hoping for.

We all know I am no fan of a commodity rally but today's round of merger mania left investors feeling everything is undervalued.

OSI Restaurant Partners Inc. (OSI) is being taken private for a 23% premium, NVIDIA Corp. (NVDA) is buying our old friend PortalPlayer Inc. (PLAY) (good move), Harrah's Entertainment Inc. (HET) is buying London Clubs International (old news), McKesson Corp. (MCK) is buying Per-Se Technologies Inc. (PSTI) for a 15% premium, Abbott Laboratories (ABT) is buying KOS Pharmaceuticals Inc. (KOSP) for a 50% premium (nuts), and Four Seasons Hotel Inc. (FS) is being bought by Bill Gates and Saudi Prince Alwaleed for a 28% premium.

That's a $14B day!

The S&P blew through my 1,370 bullish target and didn't look back until it beat 1,380 where it decided to take a quick break.

The NYSE tore through 8,800 by 1pm and never looked back, while the Nasdaq took a mild rejection off my 2,375 target in the final minutes, but didn't look worrisome.

The SOX were the real star of the day with a 2% gain right through the 50 DMA finishing near the day's high at 457 and the transports gapped over the 200 dma and closed at a whopping 2,609.

Gold was well behaved, hanging out at $627 but still not impressing the miner stocks, while oil moved up .88 to $60.02 and that sector acted as if $100 oil was right around the corner.

Perhaps it is, as I see nothing else that explains the number of record highs being recorded in the oil patch. Other than Valero Energy Corp. (VLO), the bulk of the regulars we watch have moved 35 to 50% above the trend for oil in the past 3 months.

I'm not going to worry about it -- we've had a lot of great picks lately in the non-energy arena and I seem to have gotten a handle on the earnings reports so we have a few fun weeks ahead of us!


  • American Electric Power Co. Inc. (AEP) was a no-trade under the Valero Rule.
  • Barrick Gold Corp. (ABX) was a no-trade due to lethargy in the gold patch (and gold did not break $630).
  • I couldn't resist the BP PLC (BP) $65 puts for .15
  • Berry Petroleum Co. (BRY) went up 1.3% and gave us a .45 entry on the $30 puts ahead of earnings.
  • ConAgra Foods Inc. (CAG) made a nice play with a .20 pick up on the Dec $25 puts which finished at .30 (up 50%) despite the great surroundings.
  • Caterpillar Inc. (CAT) Jan '09 $60s came in at $11.50 and now we wait...
  • In comments Arnie suggested the Eli Lilly & Co. (LLY) Jan $60s for .45 and I agreed with that one.
  • Murphy Oil Corp. (MUR) Dec $50 puts were added for $3.30.
  • Arnie also came up with Inc. (NTES), so he's on a roll today! And the Mar $17.50s we decided on for $1.10 should do very well after their spectacular earnings report this evening!
  • We cashed out Sirius Satellite Radio Inc. (SIRI) at $4.02 (up .30) and traded for the Dec $4s for .25 to protect the principal from Wednesday's earnings (just in case).

Read all of Phil Davis's articles on Seeking Alpha

Source: Options Trader: Monday Wrapup