On Tuesday, in my evening article, I said,
"There is some resistance at 36 for VIX. We may see shorts start to cover some positions before Friday's unemployment report. Profit-taking happens on the downside, too! There's a lot of focus on the SPX 1040. If that does not hold, the next soft support is SPX 1025, which would take us back to the support from Oct of 2009!"
Yesterday, the market penetrated below SPX 1040. Today, we saw more weakness in the morning. But, as VIX shot up above 36, shorts started to cover. SPX almost touched 1010 in the morning, but, came back up to close above that SPX 1025 that I mentioned.
We continued to lock in profits on our downside plays, but, got a little greedy in the morning. These closed trades were pretty much all triple-digit gains in the morning. Nevertheless, as the market bounced, we chose to take the money off the table:
July 01, 2010
12:11 | HappyTrading CMG ($138.80) Sold to Close 07P140 Jul 140 put, at $5.50 +53%
12:09 | HappyTrading AMZN ($110.80) Sold to Close 07P105 Jul 105 put, at $2.14 +53%
10:34 | HappyTrading AAPL ($248.80) Sold to Close 07P240 Jul 240 put, at $5.25 +14%
08:39 | HappyTrading AAPL ($428.80) Sold to Close 07P240 Jul 240 put, at $5.40 +17%
Gold plays were very weak today. Gold, the metal itself, slumped $43/ounce to close just below the $1200 mark. GLD dropped 3.81%! Gold miners fell hard as well: GOLD -2.21%; ABX -5.09%; NEM -4.45%. OIH services were strong again. BP bounced above $30 intraday, before closing at $29.39, up +1.77%. RIG hopped +5.53%, while DO added +2.65%. APC gained +2.99%. FDX and UPS were upgraded to "buy" and traded higher, up +2.7% and +1.95%, respectively.
The Dow finished down 41.49 points (was down more than 100 points intraday); SPX slipped 3.34 points; Nasdaq fell 7.88 points:
USO (oil) fell 3.21%, while UNG (natural gas) jumped +4.77%. As mentioned earlier, OIH (oil services) was strong. Both GLD (gold) and SLV (silver) tumbled. SOXX (semiconductor) managed a slight bounce. PBW (clean energy) traded up +0.61% (FSLR added +3.18%). FXI (Chinese ADRs) closed in the green as well.
Euro bounced today and FXE (Euro ETF) gained +2.38%. Back in June, when the Euro bounced off of the bottom, it also inspired stock markets to rally. This may be something that we need to keep an eye on. Gold fell hard today and could produce buying opportunities in the near future. Both SPX and Nasdaq are riding their respective daily lower BBs down, and new bearish formations are showing in the daily MAs. However, given that a long weekend is coming, the shorts may want to lock in some recent profits. VIX shot above 37 today and came back to close below 33. From near the 33 level, VIX could go either way tomorrow. We'll have to see how the market reacts to the unemployment report. We've cashed out many of our downside positions and are back into mostly cash.
Disclosure: no positions