Well, it is still pretty much all about the financials on the market. Even with the housing bill passed this weekend, the financial sector still could not find any cheering today. XLF fell another 4.7% to close below $20. FNM and FRE opened up in the morning, but, quickly slid into the red, closing down 10.74% and 6.65%, respectively. MER followed down with 11.59%; GS slid 3.32%; MA was down 3.74%; and, BAC slipped 5.14%.

BIDU was surprisingly strong today in a very negative environment. It was up over $13 in the morning. I cashed out a trade that was opened last Friday for a quick +52% profit:

These options traded as high as $13.9 and closed at $9.5. In a stronger market environment, I think BIDU could easily do better. BIDU could go to $360 from here before hitting any sustantial resistance. But, given the overall market conditions, we have to play things very cautiously. Although I did well on the BIDU trade, cashing out near the day high, I started a new trade on QCOM today that didn’t go so well. Like BIDU, QCOM also jumped on Thursday, and traded higher on Friday. At above $55, QCOM could start a new leg up. I got into August 52.5 calls at $3.45 today. However, the market conditions deteriorated and I had to stop this trade out at $2.42. I’ll be watching for re-entry if the market conditions get better. There are 3 weeks left in August options, and, I think these options could double from here, given a stronger market.

The Dow closed down 239.61 points; SPX lost 23.39 points; Nasdaq dropped 46.31 points:

VIX closed above 24. Techs were weak with INX2 (238.1) down 2.72% and SOX (semiconductors) falling 1.87%. XME (metals and mining) bounced up almost +1%. USO (oil) added +1.28% PBW (clean energy) tumbled 2.63%. FXI (Chinese ADRs) dropped 2.83%.

SPX

SPX lost 23.39 points to close at 1234.37. It closed below the 1240 level and below the daily MAs. Its MACD slipped.

Nasdaq

Nasdaq dropped 46.31 points to close at 2264.22. It closed below the daily MAs, but, managed to stay above the 2250 leve. Its MACD flattened.

The market was very shaky today. VIX went higher and closed above 24. At above 25, VIX could push the market over the cliffs again. SPX closed below 1240 today and could test 1220 from here. If the market were to establish this bottom, it will have to hold above 1220. Oil prices bounced up a bit, but, I don’t think it affected the market too much. The main thing was still that the financials were weak. The story is still the same: we need to see strength in the financials to sustain the rallies. GLD (gold) held above its 30-day MA. If the market slips further, we’ll be looking at GLD again.

Good night and HappyTrading! ™