BigTrends

I just can't get my arms around this recent rally. The volume is weak and just getting weaker, the market is moving up on fumes and NOT institutional sponsorship. We generally find bull market moves are supported by big institutional players and stock moving into these hands. Volume reads are the ONLY WAY short of taking the phone calls from these institutions (fyi - I have yet to get a call from these guys telling me what they are doing).

Stocks rising on big volume, institutions are accumulating. Stocks dropping on big volume, we have distribution or selling. Simple enough, right? Stocks rising on low volume, or dropping on low volume...what's it mean? Lack of participation, but it cuts both ways.

I'm truly concerned about the complacency here coming into earnings season. Did the drop in June discount earnings and guidance? We'll soon find out, but safe to say that was not the case with a name like RIMM, who got hammered post-earnings. We'll get a nice sampling of earnings this week, but mind you the market is all about sentiment right now, and if it's not turning up the volume won't, either. We

It's hard to believe this market has risen all but five days in March.  With three days to go in the month the SPX is on track to post a better than 5% gain, one of the best months on record (if it stands).  The Nasdaq is looking at even better gains.  All this in front of a market that seemed ready to roll over after February, or at least that's what we were being told.  The bear case may have held water, but as we know when too many lean in one direction...and that was the case and still is...the market is rarely so accommodating.   So, perhaps there will be a change in sentiment.   I would imagine the bears are going crazy at this point.

Wasn't it last Sunday that we heard the end was near?  The healthcare bill being signed was going to spell doom for the markets.  Everyone was saying it, and certainly the futures market reflected the sentiment early Monday.  But the armageddon did not occur of course.  In fact, we saw the dip buyers come back and force some good ol' fashioned short covering.  But next week brings us a host of events, including a short week, jobs data, RIMM earnings, end of quarter and an option expiration.  Going to be quite a week!  

We've been talking lately about very choppy conditions, which makes for difficult trading.  Our subscribers have mostly been on the sidelines here as the chart setups are just not quite there yet.  Oh there are some that look good, RIMM below is an example...and it's probably going higher, as I mentioned it in the Wednesday webinar (miss it?  email me for the link, bob@bigtrends.com).  However, the situation in Europe can't seem to get any resolution, and now we see China is trying to rein in growth.  Wasn't it China that was driving/fueling the growth here in 2009?  What to do now?  One thing is for sure the volatility will start to kick in as the unknowns start to build.

I mentioned RIMM as a chart ready to go higher.  See my notes below.  Another close above 68 confirms this for me and the indicators.

First of all, Google spent years perfecting Android, their mobile operating system (OS) for smart phones.  In a very smart product development move, Google tested many versions of the Android OS on other phones such as the much hyped DROID by Motorola in an attempt to perfect it before they rolled out their own phone.

And it appears that strategy has worked very well.  The graphic below shows the increasing popularity of the Android OS compared to its competition.  As you can see, the survey of future smart phone buyers has shown a meteoric rise in the popularity of the Android OS, scoring even higher than RIMM's Blackberry OS.



It will be very interesting to see where this surge in popularity takes the Nexus One over the coming months.  Many people question if the luster of Google's newest creation will tarnish with time.  Apple's iPhone and RIM's Blackberry are available on multiple networks, while the Nexus One will only launch with T-Mobile initially.

I expect the other carriers to pick up the Google phone when the iPhone makes the jump to Verizon or T-Mobile in the coming months, giving it the opportunity to grow market share.  In the meantime, check with your carrier to see when your current contract expires, because if you are in the market for a new smart phone, the Nexus One appears to be the Next Big Thing.

So, RIMM ripped last week and posted some enviable numbers...and provided super guidance.  The market reacted accordingly, running the stock up 10% on expiration Friday.  Clearly some shorts were stuck in a trade and had to exit poorly.  But for me, the true buy will be over the next few days,  and I will tell you why.  Friday was a huge breakout on volume.  I generally want to see the price rise on good volume 4-7 days AFTER, so with Friday being day one we're looking at a time frame of dec 23-Dec 29.  If we break higher then there is more upside...today is too early, it's day 3, but day 4-5 is ideal.  Today, RIMM is lower on a ridiculous downgrade, but whatever.  Our sights are set on this week and next, so let's be watching this one for a an opportunity.

As for trade ideas, i'm looking at the 70 calls straight or perhaps a 65/75 call debit spread.

There looks to be a lot of November Expiration related "pinning" going on as we head into Friday's close.

The S&P 500 (SPY) is starting to move towards 110 ... a last hour spike to that level would be likely a "false" pin that would be reversed on Monday, in my view.

Many big equities are moving right towards strike price pin levels, including (AAPL) at 200, (GOOG) at 570,  (RIMM) at 60, (DIS) at 30, (AIG) at 35, (FITB) at 10, (NFLX) at 60, (AMZN) at 130, (COST) at 60, (DISH) at 20, (MON) at 80, (HPQ) at 50, (KO) at 57.5, among others.

As we've previously mentioned, this kind of "pinning" action, where a stock closes right around an option strike price on an Expiration Friday is due to a variety of factors.  Among these are technical, manipulation, psychological, but also the actual option open interest at these strikes.  The open interest causes market makers and hedgers to buy and sell the stock around those levels to keep the books balanced (delta neutral, etc).

We've seen it time and time again, and this afternoon looks like no exception.

Bullish Option Plays   Below are a couple of interesting names to consider for bullish option strategies.

Magna Int'l (MGA)   Magna broke out Friday from a brief consolidation pattern after testing moving average support.  There are not many stocks in the relative new high area, but MGA is there and is poised to challenge the Sept levels of the 50's.  This breakout can be bought.
     

We ended up rather mixed with a slight downside bias on expiration week in May.  We bought into some new ideas on expiration Friday and while they started off well they came off a bit as the volatility rose in the latter half of the session.  So it goes.  We did post a decent winner with RIMM and GOOG and managed our losses.

According to Yahoo today, Research In Motion (RIMM)'s BlackBerry had several smart phones in the top sellers in the first quarter of 2009.