First let's start with a very cool chart. It shows us the Dow Jones Industrial Average (DJIA) performance if we valued that performance in gold grams. It speaks to the erosion of the value of the dollar and what the DJIA is really worth in terms of gold.

DOW's 10 Year Performance:

by David Gibbs

On Wednesday after the bell, HP (HPQ) announced that they had acquired former tech big shot 3Com (COMS) for $2.7 billion in cash. This is only the most recent move in what has become large-scale square offs between the likes of HP, Cisco (CSCO), IBM, Oracle (ORCL), and DELL. For many years these companies maintained themselves within their particular areas of strength, but “amid shrinking tech spending over the past year, these giants have pursued new growth by spilling into each other’s turf, sparking new competition and undoing what had been friendly relationships.” (WSJ)

4:25 PM, Nov 12, 2009 --

• NYSE down 92.31 (1.3%) to 7,063.05.
• DJIA down 93.79 (0.9%) to 10,197.
• S&P 500 down 11.3 (1%) to 1,087.
• Nasdaq down 17.9 (0.8%) to 2,149.

GLOBAL SENTIMENT

Sentiment

Stocks fell despite merger news, a better-than-expected earnings report from Wal-Mart (WMT), and data that showed a decline in weekly jobless claims. Wal-Mart is one of only 5 Dow stocks moving higher after the retailer reported a quarterly profit of 84 cents, which beat Street estimates by 3 cents. On the economic front, the latest weekly jobless claims showed some improvement. According to the Labor Department, filings fell by 12,000 to 502,000 in the week ended November 7. Economists were looking for a smaller 4,000 drop. Meanwhile, the tech sector was in focus on news H-P (HPQ) made a bid for 3Com (COMS) and Advanced Micro (AMD) rallied on news of a long-awaited settlement with Intel (INTC).

However, the tech-heavy NASDAQ gave up its early gains and weakness in the commodities markets sent many metals, mining and energy names lower. Crude oil is down $2.52 to $76.76 on bearish weekly inventory data. Gold lost $8.50 to $1106.10 after the buck bounced a bit higher against the euro.

As the two giants in the Fibre Channel HBA market slug it out for a percentage or two each quarter, the entrants in the new market for CNAs are out of the blocks, and the race is on, and the pace is fast.

Since then, news from one of the most widely read publications in the world has taken on a life of it’s own as the industry leveraged the full capabilities of social networking to speculate on the endless possibilities.

The announcements represent important milestones for the data center network adapter market where approximately 98% of server ports are Ethernet NICs or LOM and the remaining 2% are Fibre Channel HBAs or InfiniBand Host Channel Adapters (HCAs).

"The market can stay irrational longer than you can stay solvent." – John Maynard Keynes

On Friday, October 16th, while the stock markets in the US were in a mini-decline, I decided to buy more of two of my favorite "takeover target technolgy stocks": NetApp Inc. (NTAP), and Brocade Communications (BRCD).

In a previous OptionMaestro.com post, I outlined 25 stocks which I wouldn't mind going long at these levels. I wrote about getting long the stocks by using the buy-write option strategy. This is an updated post to that one, adjusting the strikes and prices accordingly for options expiration today. It is very important to write the shares out as early as possible as volatility rushes into the market in the morning, and not wait for it to start decreasing rapidly in the afternoon. It's not too late to get premium out of many of these stocks, and writing them for just a day decreases risk greatly. I will look to be purchasing some of the stocks mentioned below pre-market to write out at opening bell. As I've stated, I don't mind holding any of these stocks long which is why I'll be using this strategy today. If I get called out I won't mind because I'll still make money. Below is the list of stocks, the potential return if exercised, and protection if they do not get exercised. To learn more about the buy/write option strategy, risks, pricing, calculations, other strategies, and options in general, click here.

Note that higher beta securities return higher percentages due to their levels of implied volatility, and because they are riskier.

As infrastructure 2.0 is turned on it will represent an irreversible transformation in the way IT services are delivered. The timing of product releases, investments and deployments could make all the difference for a range of companies and organizations.

Those who could be impacted include the cloud vendors (including Google (GOOG), Amazon (AMZN), Rackspace (RAX) and Savvis (SVVS)), the virtualization vendors (VMware (VMW), Microsoft (MSFT), and Citrix (CTXS)) and the network equipment vendors (including Cisco (CSCO), HP (HPQ), Juniper (JNPR), F5 (FFIV), Brocade (BRCD) and Extreme Networks (EXTR)).

• Goldman upgraded Posco (PKX) to buy and added them to their conviction buy list. They also increased their target price to $150.

• Lazard upgraded Dryships (DRYS) from a hold to a buy.

• Meredith Whitney downgrades shares of Goldman Sachs (GS) from buy to neutral with a $186 price target.

• Goldman Sachs downgrades Meredith Whitney after her 15 minutes of fame run out.

• Deutsche Bank initiates coverage on Citibank (C) with a buy and a $5.50 price target.

• Credit Suisse upgrade credit card companies Visa (V) and Mastercard (MA) from neutral to outperform. They clearly feel better about consumer spending.

• Some big money is flowing into call options of Costco (COST):

COST – Costco Wholesale Corp. – Shares of the merchandise warehouse operator rose nearly 1.5% during the trading session to $58.77. A chunk of calls purchased in the front-month today indicates some investors expect continued upward movement in shares by expiration this Friday. Approximately 8,000 calls were purchased at the October 60 strike for 15 cents apiece. Shares of COST must increase at least 2% to $60.15 for investors to amass profits.

With the October options expiration approaching us in just 3 days, I thought I would outline some trade ideas on stocks I wouldn't mind going long on, that would return good percentages by Friday (as of market close Tuesday). When using the buy/write option strategy, it is important that you are willing to hold the security in case it is below the strike price at options expiration. I have put together a list of stocks which will return a nice percentage gain if they are above the strike price as of October options expiration, but will also protect (lower cost basis) to the downside in case the stock sells off slightly and expires below the strike price. The list below is a very tall one, and for your convenience I have ranked the securities in order from the largest potential % return to the least. To learn more about the buy/write option strategy, risks, pricing, calculations, other strategies, and options in general, click here.

Note that higher beta securities return higher percentages due to their levels of implied volatility, and because they are riskier.

Bullish Calls:

WR Grace (GRA): "I like Grace, we recommended Grace in the teens, it hit a 52 week high."

By Brenon Daly

To paraphrase Mark Twain, a rumor can travel halfway around the world while the truth is still putting on its shoes. At least that’s the case with M&A gossip right now. Rumors are flying, in many cases given wing by some of the unusual multibillion-dollar pairings that have popped up in recent weeks. Who would have thought, for instance, that Cisco (CSCO) would have gone shopping in Norway (of all places) to ink its largest deal in a year and a half? And who would have picked Dell (DELL) as the buyer for Perot Systems (PER)? (Except for that guy who traded Perot options on inside information, that is.)

Wyndham Worldwide (WYN) – Shares at the hotelier broke nicely to the upside earlier in the week and stand 3% ahead of a congestion zone at $18.00. Yesterday Goldman Sachs raised the stakes with an upgrade and a 12-month price forecast of $26 per share. With earnings scheduled for October 28, it appears that one investor has used a call option combination to target a move higher in WYN today. Option implied volatility remains high at 67% but is not rising as the shares surge. There was an outright buyer of 15,000 November 22.50 strike calls purchased for 45 cents, while the 20/25 call spread traded about 9,000 times at a net of 75 cents. To break even the share price needs to accelerate by a further 15% to $20.75 ahead of expiration.

Here is a list of 15 stocks which traded higher Wednesday on unusually higher volume. I have added all 15 of these stocks to my watch list (and invite you to as well), but chose only a couple to write about in detail in this post. This post requires the knowledge of stock options. To learn more about the option strategies outlined in this post, risks, pricing, calculations, other strategies, and options in general, click here.

The table below shows the company, ticker, Wednesday's per share % increase, and Wednesday's volume increase (% increased compared to 50 day average). For your convenience I have ranked the stocks in order from greatest to least volume % change.

Caterpillar (CAT), Fedex (FDX), Joy Global (JOYG), Wells Fargo (WFC), Bucyrus (BUCY), Brocade (BRCD), Hewlett Packard (HPQ), Oracle (ORCL), Cisco Systems (CSCO), IBM (IBM)

Brocade is coveted by its customers because the company is the only networking vendor that has a complete portfolio of Ethernet and Fibre Channel technology that spans adapters and switches. The end-game for HP and Oracle is cloud computing. They know they will need this broad networking capability in the future to compete with Cisco (CSCO) for delivering compute power, storage capacity and networking bandwidth from the cloud. HP and Oracle also know this range of technology is needed short-term to protect their business from Cisco as servers evolve to fabric-based servers featuring sophisticated, high-powered networks inside.

The Ends Justifies the Means

Watching the end of a blowout NFL game and the financial markets close out 2009 could be eerily similar this year. If over the next three months it seems that market participants are simply trying to run out the clock and close this year on a high, you might be absolutely right.

The WSJ reported yesterday that storage company Brocade (BRCD) is "quietly" shopping itself around, and that two potential suitors could be Hewlett-Packard (HPQ) or Oracle (ORCL).