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Market Sinks On Latest Economic Data! SPX, Nasdaq, POT, CF, MOS, SINA, SNDA, YOKU, CLF, BTU, WLT, AAPL, GMCR, SBUX, PNRA, PCLN, IBM

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The market took a sharp drop today, as the latest trade data from China showed decrease in both exports and imports.  In addition, US jobless claims unexpectedly jumped!  Energy and mining sectors were really weak.  Coal stocks have been dropping since Monday and fell more today:  WLT -3.42%, CLF -7.03%, BTU -5.78%.  Just last Thursday, CLF was trading at around $100/share; it closed barely above $85 today!  On Tuesday, we talked about the weakness in the fertilizers.  They continued to sink lower:  POT -3.72%, CF -2.02%, -4.58%.  On the upside, I said on Tuesday, "If you're looking for trades on the long side, you might want to keep your eyes on some of these Chinese internet stock."  Going against the current today, SINA was up +2.4%; SNDA added +5.54%; YOKU gained +3.62%.

We placed ourselves properly to take advantage of this selloff.  This weekend, in my Sector Watch, I said, "If SOXX pulls back, I think the broader market will too."  SOXX fell hard on Monday, so, it was already a warning sign.  Both CIEN and FNSR reported badly and semiconductors sink further.  It was down sharply again yesterday.  Thus, we only held on to downside plays and didn't add any position on the longside, even though the broader market was really strong throughout the week.  The Dow was up for the week until today, and SPX held flat!  We locked in some profits on the AAPL puts:

  • March 10, 2011
  • 06:53 | HappyTrading AAPL ($346.80) Sold to Close 03P350 Mar 350 put, at $7.55 +74%

These were bought just yesterday at $4.25 and $4.5.

Every weekend, usually on Sunday evening, I write an article called "Market Forecast + Sector Watch".  In a few paragraph, I summarize the likely scenarios for the coming week.  In addition, I point out the sectors that may move the most and/or affect the broader market the most.  Even for myself, throughout the week, I go back and re-read my own Market Forecast to remind myself what my research over the weekend had indicated to me.  A lot of times, especially when the market is volatile, it may be difficult to deciphor what the market is doing during the week.  But, if you focus on some benchmarks and important factors that were determined before the start of the week, it could help you to keep calm and center your thoughts.  To obtain access to my Market Forecast, please subscribe to my Premium Articles service for just $49/month (Click Here)

In the Trading Room, we traded some GMCR calls and SPY puts.  GMCR surged a whopping +41.41% today on the news of a "single-serve" deal with Starbucks. In the Trading Room yesterday, we mentioned that GMCR was up big in a down market, which was significant:

March 9, 2011 10:43 AM
GMCR
up 6.6%

This morning, even with GMCR was already up more than $12, I mentioned that getting some GMCR calls would be a good idea.  At the time, GMCR was trading around $56:

March 10, 2011 8:21 AM

GMCR
looks like it'll see $60 soon; if you have puts already in play, might be a good hedge to get some calls here...

In just one hour, GMCR popped over $60 and went all the way to $62.37!  GMCR March 55 calls more than doubled in about 1 hour!

March 10, 2011 9:54 AM
GMCR
55 calls from $3.1 to $7.5 in 1.5 hours!!
(+142%)

Many of our members went with the easy pick:  SPY puts.  Sometimes, this is the best choice, espeically with many stocks already down so much.  If the momentum is coming down, SPY puts can rise up fast:
Frosty Muggs March 10, 2011 6:38 AM
SPY weekly 132 puts - rest out at $1.60 from $0.82 +95%

Skymist
March 10, 2011 6:42 AM
SPY puts, big gain today. Locking them in with trailstops.

Frosty Muggs March 10, 2011 7:07 AM
SPY - If SPX breaks the 1300 floor, I'm rolling my 133 puts to next week.

Frosty Muggs March 10, 2011 12:22 PM
SPY weekly 133 puts 1/2 out at $3.10 from $1.27 +144%

The Dow dropped 228.48 points (below 12,000); SPX fell 24.91 points; Nasdaq tumbled 50.70 points:

XLE (energy), OIH (oil services), and XME (metals and mining) all closed down more than 3.5%.  XLF (financials) lost 2.01%.  GLD (gold) and SLV (silver) continued pullback.  MOO (agriculture) lost 2.97%.  FXI (Chinese ADRs) fell 1.78%.

SPX

SPX fell 24.91 points to close at 1295.11, below 1300.  Its MACD went down.

Nasdaq

Nasdaq tumbled 50.7 points to close at 2701.02, just above 2700.  Its daily MAs and MACD were lower.

SPX closed below 1300, which had been a support.  Nasdaq barely closed above 2700.  VIX did not go up too much, just +8.21%.  With a big down move on the market, VIX could have gone up a lot more.  22 is a resistance for VIX, which it tested today.  We may see some bounces, especially in the coal stocks, which have been dropping like rocks!  But, many stocks haven't really pulled back at all!  For instance, PNRA recorded a new all-time high today, closing down just $0.11.  PCLN was down less than 1%.  IBM hit a new all-time yesterday at $167.72, and, barely just gave back the gains today.  The market is on the defensive now, although it may need to breathe a little before the next leg down.

Good night and HappyTrading! ™ (click to see our Facebook Page)

Stocks: POT, CF, MOS, SINA, SNDA, YOKU, CLF, BTUUQ, WLT, AAPL, GMCR, SBUX, PNRA, PCLN, IBM