The -148 point opening dip on Tuesday wiped out all but one position after Goldman earnings disappointed.
I told you on Monday night I thought we could have trouble at Tuesday's open because of the earnings disappointments by IBM and TXN. The futures were already headed south before the open and the Goldman earnings put them on the express train to support.
The Dow dropped to 10,007 and the S&P to 1060, both support levels and the buyers showed up almost immediately. A rumor that the Fed could provide more stimulus to the banks prompted a short covering rally about 1:30 in the afternoon that pushed all the indexes well into the green.
The morning dip took us out of everything except Trina Solar. There was some good news because we exited for a minor profit on every position. It is small consolation to the $5 + dollars we would be up had we not been stopped out. Unfortunately that is what makes a market.
The drop gave us a terrible exit for VMWare at $2.00 ahead of earnings but it was still profitable.
I am expecting the market to be choppy over the next couple days and then some possible weakness next week. I don't want to load the boat again until we get past this volatility. I am adding Goldman as a play tonight after the big rebound on Tuesday.
GS - Goldman Sachs - $149.00
Goldman disappointed on earnings mostly because of the $550 million payment to the SEC and a $600 million payment to the City of London for a bonus tax. They did have some weakness in their trading and investment banking but the quarter was not kind to any bank so I am discounting that as I believe every other investor will as well. Goldman is still the premier franchise and the rebound today shows investors are still buyers.
ENTER TRADE ONLY IF GS is positive.
SELL August $140 PUT (GS-10T14000) currently $1.82 stop GS @ $144.50
Chart of GS