Daily Stock Market Equity and Options Trading Commentary

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Monday, March 23, 2009

Bulls Chalk Another W on All Major U.S. Stock Market Indices

All indexes had a massive move today with the S&P 500 leading. The S&P was up 7.08%, Dow up 6.84%, and the Nasdaq up 6.76%. I was out today selling into the strength, and buying some BGZ call options and SDS stock. I got stopped out on my BGZ today, but I bought some SDS right at the bell for 74.74 a share. I think we may have a bit of selling pressure tomorrow if we cannot break through the 830 mark on the S&P within the first hour of trading. Looking at the futures (a long shot this early) the indexes are pointing down slightly, which is impressive given today's gains. I actually like, and agree with this new (and long overdue) plan for the banks that the Obama administration has crafted. I honestly think it should work! I wish it would have been announced a bit sooner, but better late than never. The reason I agree with it so much is because it actually provides incentives for the private sector to invest in these banks. In my opinion this will contribute to fixing this crisis more than anything else.

I think that if we get some news about reinstating the uptick rule anytime soon we'll have another nice rally as well. BGZ and SDS should be solely for trading strategies and should not involve investment strategies, set tight stop losses on either ETF. We are not even close to out of this crisis yet, but it certainly helps when we get some clarity out of Washington. I revised my outlook on retesting the lows today. I now think we have a 50/50 (previously 75/25) chance of retesting the lows on the S&P by April option expiration.

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