07/10/2011 Market Recap - Face Ripping Rally!! (Part Deux)

Broader Market Weekly Performance:

Dow +0.59%

S&P +0.31%

Nasdaq +1.88%

Russell +1.49%

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MARKET UPDATE:

Well, the rally continued this week building on last week's run. With a shortened trading week here in the US, most of the news cam from global sources.

China raised rates for the sixth time this year. Greece received its bailout funding. Portugal's debt was downgraded and so were Italian banks. Italian interest rates are soaring to new highs as well.

Here at home, ADP had great payroll numbers Thursday. Although on Friday, the jobs data was dismal and the Unemployment Rate popped to 9.2%. Last month's number were also revised down.

This week, data will be light and eyes will be on earnings. The market is pretty overbought going into earnings but we could see continued upside for the first week or two as earnings announcements get underway. If the market continues rallying it will set up for a decline as July wears on into August. I do expect earnings to be "good" overall but after such a recent run continued strength will make the market even more frothy.

S&P 1330/1340 is the new support level and should provide a floor for the market to rise from. If that level fails then 1310/1320 or 1300 will provide the next level of support.

S&P 1365 will provide resistance for the rally. Will earnings be enough to push through? Stay tuned and we'll see!

What are your thoughts on the market? Place your comments below!

BOOKINGALPHA UPDATE:

Monthly Advisory Commentary:

Both spreads expire this week. The market is looking toppy and Friday's action was encouraging of some reality returning to the trading action. Overbought conditions were not eased by Friday's action. This makes August option spreads extremely attractive. I will most likely deploy some August trades this week as a result.

Both existing spreads are actually set up very nicely going into OpEx week. The distance between the market and the short strikes of both spreads will allow for quick decay (Theta) of the premiums; even if strength returns to the market prior to OpEx.

If the market rises our existing spread values will continue to decline (a good thing) as the spreads are still OTM (Out of The Money) while August option premiums will continue to increase. The increase in August option premiums will make for great adjustments (juicy credits are/will be available), if needed, or to initiate new August trades.

Weekly Advisory Commentary:

Well the "Jesus-stock" lived up to its moniker again Friday rising when the rest of the market was feeling the pain of the jobs data.

Friday was an outside day (the open and close were outside the previous day's trading range) for AAPL and volume was slightly increased. It was also the 5th consecutive close outside the upper Bollinger Band.

Williams%R is at the lowest value since the 2/15/11 and 5/31/11 tops and the RSI is at the highest since the 1/14/11 top.

A 2 standard deviation event is occurring right now. For those who are not math geeks like me, this means that what is happening right now in the market, and AAPL, doesn't happen 95.45% of the time.

Stay tuned and happy trading!

What are your thoughts on the market? Place your comments below!

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