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01/16/11 Weekend Update & Outlook - Choppy Week But Bulls Prevail

|Includes: ORCL, QQQ, SPDR S&P 500 Trust ETF (SPY)
The market continued it northerly run posting 1-2% gains for the week across the board.  Let's see how the markets ended for the week:
Weekly Performance:
Dow          +1.20%
S&P           +1.71%
Nasdaq    +2.05%
Russell    +2.51%
VIX             -15.75% 

Earnings season started this week and economic data wasn't as strong as hoped, but nevertheless reflected continued improvement  Here is a quick rundown:
-Successful European debt sales
-Stocks continue to melt up in spite of weaker than expected economic data
-Muni's fall on their face as State & Local Governments are unable to inspire confidence regarding budgets and their ability to pay
-Inflation is the worry with PPI, CPI, import prices data releases
-Unemployment Claims jump
Bottom Line:  data was less than great but the market shrugged it off and continued its balloon-like lift.  The continued rise has driven the VIX to Summer 2007 levels.  Yes, 2007 when stocks were at their highs and everyone was using their house as their own personal ATM.  However, timing is the issue as there is still some room to run in the charts and being only the second week of earnings, the market may want to stretch its legs a little further.
Like I mentioned last week, I feel the market is helthy overall.  Coming off such a large move in December gives me some pause as markets like this take the stairs up and the elevator down; meaning they rise slowly and fall quickly.  Complacency is very high and the constant 1%+ plus weeks with no sideways movement, much less a pullback, make me a little weary of getting very long here. 
Being short in this market isn't necessarily where I would want to be either as this drift can continue for an extended period of time.  Therefore, I continue to use out of the money credit spreads and deep in the money debit spreads looking for "singles & doubles".  This is not a time to swing for the fences. 
Areas of support exist at S&P 1280, 1250, 1225ish, and ultimately at 1175.  Resistance remains at S&P 1300 and 1310.

The SPY Iron Condor currently open is looking great going into expiration and full profit is expected on the trade.  A QQQQ Debit Put spread was also opened last week and depending on market strength this week may require a small adjustment.   
The complex ORCL trade is behaving very well as the stock continues to hold the low $31 level.  This trade has been quite a fun one for creative hedging and is looking great going into expiration.  Losses were mitigated and capped a few weeks ago with the final adjustment and this week the trade will be closed out before expiration. As a result, we have the potential for a very small loss and possibly a healthy profit, which is a good place to be.