What a relief! After that awful jobs report it certainly seemed as if the rally started Monday was going to fizzle out, and maybe break some support levels. Well, the dip buyers had other things in mind. Volume was big early in the session, of course many bailing out on stocks as the BLS released that we created fewer jobs in July than expected. Volatility climbed early but declined just as much (and more) as the fear was removed. Was this a one-time event or something worse? Perhaps a sign of things to come? Whatever the case, markets finished at/near their highs of the session...an impressive come back on good turnover. Breadth was nearly 5-1 negative early but managed to close near breakeven.
We had a superb week of booking gains!
August 05, 2010
06:42 | Bagger Vance CTRP ($42.70) Sold to Close CTRP 082110 40 C Aug 40 calls, at $3.70 +111%
August 04, 2010
10:03 | Bagger Vance BIDU ($86.76) Sold to Close BIDU 082110 80 C Aug 80 calls, at $7.55 +129%
09:33 | Bagger Vance AMZN ($127.40) Sold to Close AMZN 082110 125 C Aug 125 calls, at $5.05 +173%
09:32 | Bagger Vance AMZN ($127.40) Sold to Close AMZN 082110 120 C Aug 120 calls, at $8.65 +52%
08:48 | Bagger Vance SNDK ($45.70) Sold to Close SNDK 082110 43 C Aug 43 calls, at $3.40 +23%
07:30 | Bagger Vance GOOG ($498.50) Sold to Close GOOG 082110 500 C Aug 500 calls, at $8.90 +48%
07:27 | Bagger Vance LVS ($28.60) Sold to Close LVS 082110 27 C Aug 27 calls, at $2.13 +61%
Below are a weekly and daily chart of volatility. Even with the action Friday there is still a persistent downtrend in place.
The daily pattern shows the VIX under the 200 MA here. Below here leaves room to drop and the market to rally.
The SPX chart below shows us a resilient effort to hold the gains from earlier in the week. We're still in a stockpicker's market.
The market looks constructive here after testing support on Friday am. The HPQ news after the close is a wildcard however; unexpected and putting pressure on the Dow and SPX. This is clearly an isolated incident and should be brushed off quickly. The Fed meeting is this week, they are likely to say nothing and be more transparent about the future policy.
Have a great weekend!
Bagger
Disclosure: no positions