Options Trader: Tuesday Wrapup

by: Philip Davis

Wow, what a day!

Oil? What oil? As soon as MacWorld started no one seemed to care anymore, which was a shame because it was a fun day for oil too!

iPhone 10 1 07There was "Just One Thing" at MacWorld, and it was the iPhone -- looking very cool indeed but not available until June. Jobs is on CNBC saying specifically that there are no option issues; that means it is very unlikely that there is an SEC investigation.

As I said last week when "THEY" were pulling every trick in the book to shake people out of their AAPL shares: "Unfortunately, in today's media saturated world, it is not enough to just check our sources -- we also need to check the agenda of our sources!"

Even this morning as MacWorld began, rumors were flying that Jobs' family was in attendance because he was going to announce his resignation. I've never seen such a massive PR attack mounted against a company. But then again it wasn't the company they were aiming for -- it was the retail shareholders of Apple stock who were onto a good thing and had to be "eliminated." One can only hope that all those "Apple insider sources" are discovered. But as we learned from Hewlett-Packard Co. (NYSE:HPQ), a company has to be very careful in its investigations.

I think it is important that people "vote with their eyeballs" so to speak and let the Financial Times know that legitimizing/sensationalizing rumors fed to them by people with a clear agenda will drop them out of the realm of legitimate financial web-sites. The timing, content and source of this story all made it very questionable yet in 3 days (over Thanksgiving) they ran 4 stories on the subject -- still visible in the top right under "Editor's Choice."

In America we are taught you have freedom of speech, but you can't shout "fire" in a crowded theater and panic people. The Financial Times chooses to shout "scandal" in a crowded market and cause their readers to lose many millions needlessly dumping Apple stock.

Meanwhile, the markets had a so-so day, holding up well as the energy sector plunged, but not doing so well when the energy sector bounced back a bit in the afternoon. As I said at 1:30 when I dumped out of my protective NASDAQ 100 Trust Shares ETF (QQQQ) puts: "If this demonstration of everything mankind has accomplished in the 21st century all wrapped up in one cool, portable package can't start a tech rally -- then it really is time to cash out and give up."

US Markets 10 01 2007 Chart

Oil -- oil, oil, oil... Hmm, what to say... The low for the day was just .09 under my $54.34 target and came early, triggering a fairly perfect exit for our positions in the morning. Then the oil market was kind enough to bounce all the way back to $56.20 before settling just .06 below my $55.66 middle target.

I profusely apologize for missing the mark, I didn't think the dollar would have such a good day!

It's going to be very interesting tomorrow as inventories are out a 10:30 coming off the warmest winter week in history and there are STILL 293M barrels of oil slated for February delivery to Cushing, OK!

As our pal Zman so aptly put it today: "If the market climbs a wall of worry, then crude oil slides on a plethora of pumping."

The dollar popped over 84.50 and finished at 84.74, which will be a huge problem for commodities if it breaks over 85. Gold popped back up to $615 but it did little to rally gold stocks, so the move is suspect to say the least.

Oil Dollar Gold 10 01 2007 Chart

We ended up channel trading the XOM $72.50s as that was just too easy, as I also pointed out at the open and scalping quarters was a fun pastime as we watched the rest of the oil saga unfold. As to the rest of the oil plays -- I promised I would say this until you are haunted by it in your sleep:

Always sell into the initial excitement! Don't be greedy, take the money and think about it for a while -- you can always redeploy profits but a loss is a noose around your neck!

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