Options Trader: Thursday Wrapup

by: Philip Davis

Come on -- is that all the bears have? An Intel Corp. (NASDAQ:INTC) downgrade a Boeing Co. (NYSE:BA) pullback, Wal-Mart Stores Inc.'s (NYSE:WMT) poor sales and Honeywell International Inc. (NYSE:HON) pulling back .33 made up almost the entirety of the Dow's losses. Half the components were positive, but all were understandably nervous and only Johnson & Johnson (NYSE:JNJ) managed to add a full point.

Let's remember that a true champion has to prove he can take a punch, and the Dow is moving into its Rocky phase as we test the 12,000 level.

The real story of the day is the 45 point rise between 9:50 and 11:20 that almost took the Dow positive for the day. After all the nonsense, we ended up just 12 points down on the day at 12,018.

DJIA Chart 3 11 06

The S&P also refused to lose, down just 0.03% for the day, while the Nasdaq cut it even closer with a 0.01% loss -- the NYSE decided to show off and actually finish up 4 points at 8,722.

We got no cooperation from the SOX (down .5%) or the transports (down 1%) but that Just Didn't Matter today. Lost your SOX? No means of transportation? Is it over? No way!

We don't need housing, we don't need transportation, we don't need chips, we don't even need energy (as they were a sad little group today), we didn't even need the Bankers as the BKX lost half a point. Nope we don't need any of those things!

What did do well today? As usual, the brokers did well, as did hospitals, but on the whole it was a lack of bad sectors that kept the markets afloat -- things just didn't go down... Even retail was a mixed bag despite the bad news this morning.

One thing that went down hard today was crude oil, which dipped down to $57.88 at the close, although you wouldn't know it from the flat performance of the energy sector.

Oil Chart 3 11 06

That did not stop us from going in and out of oil puts all day with several 20% gains in ExxonMobil Corp. (NYSE:XOM) $70 puts and Energy Select Sector SPDR ETF (NYSEARCA:XLE) $55 puts. The Chevron Corp. (NYSE:CVX) $65 puts did not work out so far and are in for an average of .45 (down a dime). The XOM $70 puts remain at an average of .75 and are even now, while the 3rd round of XLE $55 puts are up a dime at .95.

Gold tacked on another $8 to finish at $627, but the dollar bounced back at the close, which explains why Newmont Mining Corp. (NYSE:NEM) gained just .13 today.

We wisely stayed away from stocks today, other than a quick play with Microsoft Corp. (NASDAQ:MSFT) and NASDAQ 100 Trust Shares ETF (QQQQ), but it was a very exciting day nonetheless.

Whole Foods Market Inc. (WFMI) got hammered in AH, down 15% so far. Our man Cramer told us to stop trading and look at the ugly chart pre-earnings and, in comments at 2:47, I said: "I wonder what these guys know?" Note to self -- when someone comes on TV and tells you inside information -- make the trade!

SpatiaLight Inc. (HDTV) maker Syntax-Brillian Corp. (BRLC) hit the cover off the ball with their earnings. The Consolation Prize Theory marches on... In fact, retail earnings so far indicate that the upper middle class is still spending hand over fist -- it's the Wal-Mart crowd that's slowing down.

Microsoft Corp. (MSFT) got a small boost from their Linux announcement, but I don't see a firm date on Vista shipping yet, which is what we counted on when we took the Dec $30s for .20.

We also grabbed the QQQQ $42s for .60 ahead of that news, but it may be an earnings surprise from Electronic Arts Inc. (ERTS) who are up 8% in after hours.

JDS Uniphase Corp. (JDSUD) didn't suck as much as expected -- good for the Nasdaq. Western Digital Corp. (NYSE:WDC), a $4B disk drive maker, also shocked analysts with strong earnings (+49%), also very good for the Nasdaq!

Speaking of Cramer, I think he picked a gem tonight with Quest Software Inc. (NASDAQ:QSFT). I wish we could have caught this sooner but its another option scandal victim that should be much higher but scared everyone off. The $15s are only .20 but I'd rather get a longer look with the April $15s for $1.55. There's no reason to chase, they just missed by 14% and the Cramerites will pump it up and dump it by next week.

aQuantive Inc. (AQNT) got killed as they lowered guidance by possibly 5 cents (8%) and the stock dropped 16% in late trading. ValueClick Inc. (VCLK) went the other way, up 14% today on a beat. I'll be looking to pick up AQNT if it holds the 200 DMA at $24.60.

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