Options Trader: Wednesday Morning Ideas

| About: MasterCard Incorporated (MA)

Japan was open yesterday and our markets went up.

Cat 02 05 2007They are open again today, so we'll see how my premise holds up into their 2-day closing tomorrow. China is already closed (not Hong Kong) for the week, and Europe gets back to work this morning and looking strong already (7:30).

Today's market goose will be provided by MasterCard Inc. (NYSE:MA), where we picked up the June $120s for $2.50 on Monday. We'll be regretting the June $110 puts at $2.90 as they had HUGE (+70%) numbers, beating estimates by 36%. After consolidating at $110 since November it will be interesting to see where this one ends up. If the American consumer is truly dead, they must have on-line shopping in the casket!

Not a whole lot going on in the international markets the day after May day, so it's up to U.S. to lead the way:



Day's Move

Must Hold

Comfort Zone

Break Out

Next Goal

Dow 13,136 73 12,468 12,600 13,000 13,500
Transports 2,842 7 2,825 2,900 3,000 3,250
S&P 1,486 4 1,430 1,460 1,500 1,550
NYSE 9,639 12 9,218 9,465 9,600 10,000
Nasdaq 2,531 6 2,454 2,500 2,600 2,750
SOX 494 1 477 490 500 560
Russell 816 1 803 820 850 900
Hang Seng 20,388 69 20,200 20,600 21,000 22,000
Nikkei 17,394 119 17,400 17,500 18,300 18,500
BSE (India) 13,872 closed 13,200 14,000 14,725 15,000
DAX 7,441 32 6,900 7,000 7,400 8,000
CAC 40 5,978 18 5,650 5,800 6,000 7,000
FTSE 6,448 28 6,325 6,450 6,600 7,000

If we can only turn those black boxes green -- we will be back in party mode. We really need a good day out of the transports, but that will be up to oil and whether we can keep it below the $65 level this week. Inventories are out a 10:30 and ZMan notes the crack spreads are leveling off which should put pressure on refiners Tesoro Corp. (NYSE:TSO) and the majors. Zman still likes Valero Energy Corp. (NYSE:VLO), but I'm looking for a breakdown as demand is clearly slipping in a pattern that gave us a 5% correction in the oil patch last May.

Cumulative Gas Demand 02 05 2007

Having been badly burned by refinery fires, I'm a little shy about jumping right in with the shorts -- but there are a lot of tempting candidates if we can get past this inventory, so stay tuned.

Happy Trading put up a great monthly review yesterday, and it's well worth checking out his charts over at Wang's World. Our chart of the day yesterday was the S&P, which must hold 1,485 today, but today we are ignoring all that as we will hopefully be lining up another round of Google (NASDAQ:GOOG) plays, which gave us a 96% return last month. Does this chart look worth another spin? We'll decide in the intra-days!

Google 02 05 2007

Read all of Phil Davis's articles on Seeking Alpha

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