Check out our Big Chart. Check our our bounce levels, which I posted on Monday and still are:
- Dow 12,720 weak, 12,950 strong.
- S&P 1,375 weak, 1,400 strong.
- Nasdaq 2,900 weak, 3,000 strong.
- NYSE 8,000 weak, 8,100 strong.
- Russell 790 weak, 805 strong.
Just two days later we're right in the zone and – most importantly, our weak bounce lines held on yesterday's dip – that's a very good sign.
The best thing about re-establishing trading ranges is that it lets us take advantage of channel bets like yesterday's USO trade from the morning post, where we caught a nice 50% gain for the day and we took that money and ran as oil tested the $86 line – just $1 off our target without all that tedious waiting… Of course the Futures bet on /CL was well-timed and a $3 move in the Futures pays $3,000 per contract so thanks to the oil crooks for being so predictable. We got our cease-fire rumor in the Gaza and that was all it took to knock oil back 3% but it was a rumor only – which is why we quickly got out and now, maybe, we'll be able to do it all again on a new set-up (oil currently back at $87.50).
Unfortunately, the HPQ Jan $12 puts we also talked about in the morning post only made it to $1.17 at the open but, as expected, they have already fallen back to .90 for a 23% gain on the day. Trades like that simply follow PSW's Rule #1 (and there are only 2): "ALWAYS sell into the initial excitement." Our job is to sell premium – so…This article will become free after 48 hours (see below for free content). To read the rest of this article now, along with Phil's live intra-day comments, live trading ideas, Phil's market calls, additional member comments, and other members-only features - Subscribe to Phil's Stock World by clicking here.