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Market Bounces on Latest Economic Data and M&A Activity

|Includes:AGU, AMZN, BHP, CF, CLF, FCX, MOS, Potash Corporation of Saskatchewan Inc. (POT), WLT, WYNN, X

The market was strong out of the gate this morning on the latest economic reports, including better-than-expected industrial production and housing data.  WMT reported solid earnings and raised its full-year guidance.  WMT shares traded up +1.21%.  HD barely beat the estimates with its earnings, but, its shares went up +3.4%.

In addition, BHP initiated a takeover bid for POT at a price of $130/share, to which POT publicly rejected as being "grossly inadequate".  Stocks in the agriculture sector all jumped (see Sector Watch from this weekend).  POT gained a whopping +27.66% to close just above $143, above the BHP bid price.  AGU, which had tried to buy CF last year, went shopping again this weekend with a bid of more than $1 billion for Australian grain producer AWB.  AGU shares rose +4.58%.  CF added +4.66% and MOS hopped +8.74%.

Mining stocks were very strong today as well:  WLT +7.27%, CLF +3.97%, X +4.23%, FCX +3.11%.  We opened a few new trades this morning, and took some quick profits before the end of the day, including trades on AMZN and WYNN:

August 17, 2010
12:16 | HappyTrading AMZN ($129.40) Sold to Close 08C125 Aug 125 calls, at $4.75 +44%
11:26 | HappyTrading WYNN ($90.90) Sold to Close 08C90 Aug 90 calls, at $1.90 +76%
10:21 | HappyTrading AMZN ($129.95) Sold to Close 08C125 Aug 125 calls, at $5.30 +61%
10:20 | HappyTrading WYNN ($91.19) Sold to Close 08C90 Aug 90 calls, at $2.10 +94%
08:50 | HappyTrading AMZN ($129.75) Sold to Close 08C125 Aug 125 calls, at $5.10 +55%
08:39 | HappyTrading WYNN ($90.79) Sold to Close 08C90 Aug 90 calls, at $1.95 +81%

For WYNN, we got into the August 90 calls and basically doubled in a couple of hours.  Our highest exit was at $2.1; the day high was $2.11.  Those August 90 calls dropped all the way back to $1.15 for the close.  So, our exits were very good.  We also got some good timing on the AMZN trade.  Our highest exit there was $5.3 and the day high was $5.4.  The AMZN August 125 calls closed at $4.2.  Both of these trades were initiated this morning and completely closed by the end of the day.

The Dow ended the day up +103.84 points; SPX added +13.16 points; Nasdaq gained +2209.44 points:

Almost every sector ended in the green today.  XME (metals and mining) led the charge with a +2.8% win.  OIH (oil services) bounced +2.33%.  XLE (energy) went up +1.67%.  XLF (financials) was muted, albeit green.  SWH (software) garnered almost +2%.  MOO (agriculture) vaulted +4.88% on the M&A activities.  FXI (Chinese ADRs) rose +0.84%.


SPX added +13.16 points to close at 1092.54.  It closed just below the 30-day MA.  The MACD slid.


Nasdaq gained +27.57 points to close at 2209.44, above the 2200 level.  Its 10-day MA went lower.

Both SPX and Nasdaq popped back above their respective support levels (SPX 1080 and Nasdaq 2200), although Nasdaq closed just barely above.  Just yesterday, a lot of people were looking for the market to break down, but, the market managed to hold on.  With the market indices just above the support levels, the market is hardly out of danger.  We'll have to see if the market can continue this rally.  Thus, we closed most of our August call plays and are back into mostly cash. 

The market tested SPX 1100 today, but, was not able to break through.  In the Trading Room, I commented,

August 17, 2010 10:23 AM
VIX below 24; SPX testing 1100... might need a little rest before going higher...

If you check the time stamps, from above, on our highest exits today, you can get a sense of how timely our members get vital information in our Trading Room.  The market acted on cue and started selling off.  Cashing these trades out gives us a lot more "options" for tomorrow, and perhaps the rest of the week.  If the market turns down, we will be prepared to trade the downside.  On the other hand, if the market continues to rally, we can jump back into our trades.  The funny things is, the WYNN trade came back to our original entry point, after we have doubled and cash out!

Good night and HappyTrading! ™

Disclosure: no positions