Another Day, Another Drop and Pop

Futures are up before the open on the news that Dow Chemical has agreed to buy Rohm & Haas for about 18.8b. In addition, Wal-Mart and Costco said that they experienced better than expected sales results in June because consumers were looking for discounted items in the face of $4 a gallon gas prices.

The stock market continues to gyrate back and forth in this price area and it still remains to be seen whether the major indexes can hold support and bounce again without a headfake.

11:00 am MT: Here we go again with the Drop and Pop. The SPX dropped through support for all of 15 minutes (of course.....since the previous quickest Drop and Pop on July 3rd was 20 minutes). So the market is popping now and trying to put in another Hammer. Eventually you would think the Bears would simply wear out on this short term "attempted bottoming."

Earlier in the day I sold some of my GILD calls to close one of the two trades on the stock. The first trade finished with a .40 cent profit, or 11.5% gain. I also sold part of the other GILD trade for a 4% gain so far. I also sold the AEM calls at breakeven, the stock looks pretty good, but it's just too gappy for my taste right now. I also sold the MOS calls for a 1.55 profit, or 14% gain. In addition, I sold the CLF calls for a .42 cent loss on a 1/5th size position, so only an $84.00 loss. CLF is the same story as AEM, it's too wild for my taste right now. I also culled WYE at a small .20 cent loss on a half-sized position.

I am watching TRA for another test of the 48 area, if I get it I will sell those calls.

11:40 am MT: I sold the last of the second GILD trade and finished the position with a 5% profit. GILD, like CELG and some other Biotechs behaved normally, which is like a breath of fresh air in a choppy, sloppy market. It's nice to have a normal swing once in a while.....

I'm only sitting on the AAPL and TRA calls. I will look around here and there, but the GE earnings risk tomorrow is keeping me from doing much, including a put hedge. If I play a put hedge on my last two positions, it will probably be after GE reports earnings, and if the market looks like it will sell off again tomorrow. Remember, the market keeps popping back quickly intra-day on any breaches of the short term support, so be nimble if you do puts.

1:20 pm MT: I've been up and down my watchlist and I can't see anything that inspires me. There are a number of potential put setups, which might come in to play tomorrow if GE blows their earnings. But I am also fairly leery of another Drop and Pop, and there are a lot of earnings reports coming early next week. I would imagine that there are a whole bunch of traders out there who will want to go flat the market before the end of the day Friday. So selling will probably be met with short covering and buying will probably be met with selling.

The market continues to gyrate wildly intra-day today with just that action, buying met with selling and selling met with short-covering. Energy is trying to bounce across the board, but I'm not inspired to play calls over there just yet. I'm just sitting here twiddling my thumbs.....

1:50 pm MT: I sold the TRA calls for a small .10 cent profit. I'm down to just one trade. At least I still have both thumbs to twiddle.....

1:59 pm MT: I untwiddled a thumb long enough to buy a 1/5th sized call position (a little nibbler) on CHK. I like the fact that Energy may be ready to bounce. I don't like that most Energy stocks are probably headed for lower highs. I do like the big volume on the CHK bounce today (confirmed bounce and confirmed Inverted Hammer with almost an Engulfing today). Prophet charts has the volume wrong today, it's actually over 30m shares. I had to verify the volume on five other chart services to make sure, so I wasn't able to get the post up before the close. The TOS charts have the volume data accurate. Sooooo, the net net is that I have a little nibbler in Energy.

Market Wrap: remember that tomorrow morning is all about GE. That's about all I have to say. We'll see if the market bounces or not. Traders will need to see a pretty positive report out of GE to get them to want to hold new positions into the weekend, and to get the shorts covering all the way into the close.