The market gapped higher at the open today as investors initially seemed to cheer the tax cut deal reached between the White House and the Republicans. Nasdaq vaulted above 2600, as SPX recorded a new 2010 high. However, profit-taking immediately kicked in from the opening bell. Gold, after trading above $1430/ounce (a new record high), started to plunge. Remember how we discussed using gold as an indicator for the stock market? Well, as gold charged higher in the past few days, so did the market; and, when gold turned back down, people cashed out on their profits in stocks as well.
Financials were mostly green in the morning, but, ended mostly red: GS down $1.06; JPM down $0.66; WFC down $0.27. Few stocks managed to hang on to solid gains: CTRP +4.33%; PNRA +3.81%; GMCR +7.31%. GMCR was very strong today. If it breaks above $38, it could see a breakout. GOOG has been trading wildly in the past couple of weeks. It took a sharp drop on the news of an Europen investigation over its search practice. It bounced with the market and jumped more yesterday and today on the news of entering the eBook market. GOOG traded as high as $593 today and ended at $587.14, up $8.78.
After the market, NFLX announced that its CFO is leaving the company. NFLX jumped to nearly $200 this morning and started to slide with the market. It ended at $189.81, down 1.89%. After the market, it dropped another 2.88% to just above $184. We picked up some puts on NFLX as the market got weaker in the afternoon. NFLX could easily test $180 in a weak market.
The Dow was down 3.03 points; SPX added +0.63 point; Nasdaq gained +3.57 points:
GLD (gold) and SLV (silver) both came down fast, losing 1.88% and 4.85%, respectively. OIH (oil services) lost 2.06%. XME (metals and mining) fell 1.68%. XLF (financials) barely closed green. INX2 (internet) was up +1.42%. FXI (Chinese ADRs) was up fractionally.
VIX finally went below 18 today. But, with the quick market pullback in the afternoon, it basically came back up to 18 again. SPX and Nasdaq both made intraday highs for 2010, but, did not hang on to those levels. We have to be a little more careful here. Not being able to break above the recent highs could invite more profit-taking. We cashed out on a lot of positions today and are in mostly cash again.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.