25 Jan 2011

Market Overview:

The market rallied broadly today. The Dow was still showing relative strength to smaller caps. AAPL rallied and that helped bring the Nasdaq higher.

SPY Options Trading:

I sold short some 28 Jan 2011 130 calls on the market strength today. I may have been a little early with this trade. I still think the market is due for a larger pullback. We haven't closed below the 10-day SMA since Nov 30. That's one hell of a run. If we rally further tomorrow I will look to start buying some Feb puts. The 129.50 level is my target for initiating put buying.

Key Levels in the SPY:

Resistance: 129.50

Support: 129, 128.75, 128.35 (10-day SMA), 127.50 (20-day SMA)

Individual Stock Trading:

AMZN -

I closed out my short AMZN put position today for a moderate loss. The stock looks sick as it broke and closed below its 50-day SMA, even after a late-day rally. Earnings will be released Thursday and I'd rather not gamble on that. I think they will beat big, but I'm not sure how the stock will react. I would guess that it will initially pop and then sell-off.

GLD -

I'm still stalking GLD. I'm looking for a test of 130 at which point I will look to sell some weekly 129 puts.

FCX -

FCX has failed three consecutive trading days at its 50-day SMA. I think this sets up a nice try at a short. I'll look to short FCX around 110, with a stop of 112 and a target of 100 or below.

Jan 2011 Trading Log