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February 05, 2009 | By: Andy Wang |
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The market rallied higher yesterday, led by the biotechs. MYGN reported better-than-expected earnings and propelled its shares to an 8-year high, up +17%! OSIP shares jumped more than +16% on positive results on its cancer drug, Tarceva. BIIB was also among the solid gainers, adding +4.69%. After the market, LLY received an unanimous approval from the FDA on its blood thinner. LLY shares traded just +0.85% higher on top of the +3.81% gain during the regular session. ISRG went up +9.35% on further buyout rumors. Oil prices finally bounced and lent some support to the energy stocks: APA +2.64%; HES +3.16%; XOM +1.86%.
"Trading on good earnings after the reports" worked again (see my article published on Seeking Alpha)! In our Trading Room, I talked about both ESI and APOL after I published this article:
HappyTrading January 29, 2009 7:32 AM
article last night
you can apply that to APOL/ESI
I waited until yesterday when ESI went above its earnings high to enter a trade:
HappyTrading February 2, 2009 11:18 AM
ESI
above earnings high!!
Today, we cashed this trade out for an overnight +41% gain:
11:19 | HappyTrading ESI ($131.00) Sold to Close ESIBE Feb 125 calls, at $10.40 +41%
- If I had just been a little more patient, the results would have been even better. Those ESI Feb 125 calls went as high as $11.3! Still, it was a good win! I also tallied up my published trades for January (see the trades HERE). Pretty good for such a tough market environment. Some highlights include:
- FSLR ($161.00) Sold to Close QHBAH Jan 140 calls, at $24.00 +193%
- APOL ($86.48) Sold to Close OAQAP Jan 80 calls, at $7.30 +103%
- AEM ($56.90) Sold to Close AEMBJ Feb 50 calls, at $9.00 +76%
The Dow was up +141.53 points; SPX added +13.07 points; Nasdaq gained +21.87 points:
Most sectors were higher. VIX dropeed 5.4%. BTK (biotechs) jumped +3.68%. XME (metals and mining) captured +3.96%. USO (oil) bounced +1.65%. GLD (gold) traded slightly lower; GDX (gold miners), on the other hand, came back up +1.4%. XLF (financials) was down 1.84%, while HGX (housing) advanced +6.32% on better-than-expected housing data. FXI (Chinese ADRs) garnered +2.16%.
SPX
SPX added +13.07 points to close at 838.51. It closed at its 10-day MA. The MACD flattened.
Nasdaq
Nasdaq gained +21.87 points to close at 1516.3, above the 1500 level and above its 10-day MA. The MACD was flat.
The market is trying very hard to establish a bottom. Nasdaq has gotten above its key level, 1500, but, SPX is still under 850. We need to see Nasdaq and SPX go above last week's high (Nasdaq 1550; SPX 875) to feel good about any rally. Financials are still very weak and without the financials, it is very difficult for the market to sustain any upwards momentum. GLD has tested $88 and closed above. As I mentioned this weekend in my Market Forecast:
GLD made a breaout move on Thursday and Friday, finally going above $88. This could be the beginning of a new bullish trend as the daily MAs are lining up for a new bullish formation. GLD may need to come back and test $88-$90 before going higher.
Now that GLD had gone below $88 and came back to close above, gold prices could once again move higher. Gold miners already closed higher yesterday. We'll wait for GLD to confirm that $88 will hold. Above $90, we should see more buyers coming in. March in-the-money calls are reasonably priced. AEM is another good vehicle to play gold. Although it is very volatile, it is a momentum stock and can run up fast!
Stock position: None.
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