The bulls were running in Spain this week, which makes the second straight week as the bulls on Wall Street were charging prior. This past week finished slightly higher as the dismal jobs report Friday was a hint that the economy is not totally healed.
The surprise was the difference between what ADP projected for job growth and the government’s estimate. Players were caught off guard Thursday and then on Friday, yet volatility remained contained. The VIX held under the 17% range as players took the news in stride. Nasdaq was nearly green with many high beta names performing well. The dollar was the beneficiary of the news.
The shortened trading week gave traders a chance to take positions in anticipation of the news and the upcoming earnings season (see article on here). Breadth was solid the entire week save for Friday. Sentiment is slowly turning bullish while even some economic reports flashed some promise about re-starting growth. The summer is generally a time for good trading (summer rally?) until we get to Labor Day, when the questions arise about the rest of the year.
We had quite a bit of activity this week, unloading some trades for wins and modest losses (JOYG, QCOM, X, WLT, DE) while rolling some of these out to August and adding new plays (JOYG, NTAP, QCOM, OPEN, WLT, X). We have quite a few trades working now and I suspect we’ll be booking some nice profits soon – as we did the last week in June, when we booked an amazing 10 straight winning trades, including 3 triple digit wins.
Expiration week is here and earnings season gets kick-started. The bulls still hold the upper hand and if there is less bad news from Europe and Washington we should see the action continue to tilt upwards. Short term we’re moderately overbought but the intermediate trend continues. It should be a very interesting time of trading!
Have a great weekend.
Bob Lang, Explosive Options
