US market took a sharp drop yesterday, as Argentina defaults on its $1.3 billion of debt. Jobless claims were more than expected, which didn't help. Stocks gapped down and kept sinking lower!
High-flying internet stocks pulled back with the broader market: PCLN -1.07%; GOOG -2.69%; YELP -11.16%; FB -2.71%. Healthcare stocks were weak again: WLP -2.37%; HUM -2.24%; UNH -2.29%. Financials were among the weakest: JPM -2.1%; GS -1.64%; WFC -2.3%.
After the market, LNKD reported earnings that topped analysts' estimates. Its shares popped initially to $208 from Thursday close of $180.64. The shares settled at $194.2 in the evening trading.
On Wednesday, I saw that the broader market was showing some weakness and cashed out some trades on the longside and initiated trades on the downside. We were able to capture some nice wins:
- 10:04 | Ecstatic Plays WFM ($39.10) Sold to Close 08C37.5 Aug 38 calls, at $2.05 +105%
- 08:10 | HappyTrading FFIV ($113.00) Sold to Close 08C115 Aug 115 calls, at $1.59 -56%
- 06:51 | HappyTrading UNH ($80.70) Sold to Close 08P85 Aug 85 put, at $4.25 +35%
- 06:39 | HappyTrading WHR ($141.22) Sold to Close 08P145 Aug 145 put, at $4.95 +73%
- 07:43 | HappyTrading FDO ($75.70) Sold to Close 08C75 Aug 75 calls, at $1.15 +7%
- 07:37 | Ecstatic Plays VMW ($100.90) Sold to Close 08C95 Aug 4 calls, at $6.00 +50%
- 06:51 | HappyTrading APC ($112.00) Sold to Close 08C110 Aug 110 calls, at $4.00 -11%
VMW calls gave up a +50% profit. WHR puts yielded an overnight +73% gain! UNH puts did pretty well adding a +35% win overnight. WFM dropped sharply after its earnings. But, buyers came in after the market open. Even in a weak market, the buying was supported by the technicals. So, we jumped in on WFM calls, which resulted in a "daily double" in just a couple of hours, good for a +105% profit!
The Dow was down 317.06 points; SPX tumbled 39.4 points; Nasdaq lost 39.13 points:
Most sectors were down around 2%! XLF (financial) lost 2.05%. FDN (internet) fell 2.22%. BTK (biotech) dropped 2.41%.
SPX tumbled 39.4 points to close at 1930.67. Its MACD dropped sharply.
Nasdaq fell 93.13 points to close at 4369.77.
I've been saying for a couple of weeks now that I think the markets need to consolidate a bit. Stocks were already weak on Wednesday, although some buyers came in after Fed's rate announcements. The Dow was actually giving clues early:
As you can see here, the Dow had dropped down to its 30-day MA on 7/25, and had not been able to rise higher. The 10-day MA was sloping downwards. On Wednesday, SPX and Nasdaq managed to close in the green, but, the Dow was again in the red. It was already pushing on its daily lower Bollinger Band. This is why I was increasingly cautious and picked up puts on Wednesday.
With the market major indices falling 2% in one day, I'd expected some buyers to come in on Friday. But, this drop changes the tone of the broader market. Buyers should be more cautious now. We also have the latest unemployment rate due out on Friday morning. Let's see how the market reacts.
Good morning and HappyTrading! ™