Options Trading News

October 28, 2010  Thu 8:16 AM CT


I think we needed a down day if we want this market to meander higher. Here's my reasoning:

1. The notion of the Republicans as shoo-ins with this ragtag group of Tea Partiers seems quite wrong to me. We have a popular president and a well-financed Democratic Party, and a lot of what could be considered kooks running in key states like Nevada and Delaware who don't seem like winners to me.

2. QE2 is now being discounted to the point where we have to think it will be a buy of the S&P futures to move things up more.

TheStreet.com logo3. How many more days can we run on these good earnings? We can't just say the market should be revalued upward every day because of a particular quarter or one company beating earnings expectations.

4. There were genuine non-crosscurrents yesterday. For example, oil was down early because of the strong dollar, but then we actually got a bulge in inventories, so it actually made sense for oil to be down. Typically, the actual fundamentals do not matter.

BRCM5. We had some visible falterers yesterday to combat Broadcom and F5 Networks, notably Whirlpool, which was disappointing, and Jones Apparel, which was very, very disappointing. Sprint Nextel really didn't deliver at all, and I figured that you could win either way with Sprint--better earnings or a takeover--and we lost the first catalyst for certain.

6. The big international companies like Caterpillar, Boeing, and United Technologies need a weak dollar to keep rocking. It's their real edge.

7. Today's jobless claims are key, so it would have been tempting fate to bet that we could be up for seven straight days, which is how long the streak would have been if we closed up last night.

8. The bull/bear is inching, inching, inching up to where the bulls are getting too prevalent. Without more ammo--more money coming into the market--we could stall out.

9. Much covering has occurred in the Netflix/Chipotle Mexican Grill world, and that's what moved these stocks the last 10 points each.

10. It is October. Don't you think that we should have at least one serious selloff in the so-called worst month ever? How many bears can we shoot in one month? The season may be over!

Disclosures: At the time of publication, Cramer was long BA.

(Editor's note: optionMONSTER and TheStreet.com exchange a select number of posts each day as part of a limited content-sharing agreement. Chart courtesy of tradeMONSTER.)

Share this article with your friends

Related Stories


Broadcom draws long-term bullish bet

January 12, 2016

One trader is giving the wireless-semiconductor company plenty of time to rally, buying calls that don't expire until January 2017.



The fastest money in the market
View full report »

Premium Services

Upcoming Webinar:

Using Options For Income


Jon Najarian and Adam Mesh of Options Wealth Machine discuss a detailed strategy utilizing credit spreads to generate income, and how any level of trader can use this simple trading technique.

Education & Strategy

Sweet Spot Exceptions

As discussed last week, when using the Stock Replacement Strategy to replace a stock position to trade direction, we want to use an option that has very similar characteristics to the stock. We talked about using the deep in-the-money, 80 to 85 delta option that is similar in the Greeks and has relatively little extrinsic value which tends to work against us in stock directional trading.

View more education articles »