FRIDAY OUTLOOK

The bulls were able to close the S&P 500 index back above its 50 day MA. This should shift the strength back to the buyers. The only thing that concerns me a bit is that there is relatively low volume on this rally...meaning that the buying has been a bit tepid. Even though the short term bias has turned more bullish, this doesn't mean that the market will go straight up from here. We could get a lot of volatility back and forth. CAT, EOG, MEE, and MCP have been fantastic trades. I hope you were able to profit from them. Some other bullish trades that I like are HD, TRV, JPM, and PCLN. On the bearish side, gold and silver had very bearish price action today. The SLV gapped up at the open and traded at a 30 year high for part of the day. It then sold of and managed to close below yesterday's closing price. This is generally very bearish and could mean that gold and silver could pull back a bit. I'm not telling you to short these precious metals...especially silver. I think silver could reach $40 within the next few weeks. I would, however, be careful not to chase it on days when the price action is weak. If it reverses today's bearish move tomorrow, you might want to buy calls on the SLV or add to existing positions. If it continues to sell off tomorrow, you might want to be a bit patient and see if you can buy in somewhere on the pull back. The gold miners still look very weak. AEM and NEM are set up nicely for put option trades. If gold drops a bit and these stocks continue their downtrend, this could be a great entry for puts. The reward to risk on these trades is fantastic...especially if you put the stop just above the 50 day MA. I also really like INTC for a put option trade. It is bumping up against some very strong resistance and the price action today was very bearish. The reward to risk is fantastic if you put your stop above about $20.65. The next support area is down around $19. That's about a 3:1 or 4:1 reward to risk. If you do get stopped out on a move above $20.65, you could immediately buy calls with a stop below about $20.25. The upside target would be around $22. That is about a 3:1 reward to risk to the upside.