AAPL CLIMBED HIGHER ALL WEEK DRIVING OUR 340/360 DEBIT SPREAD TO A FIVE-DAY THIRTY-PERCENT OPEN GAIN

This past week the markets continued their incredible climb higher--and our bullish play on Apple out-performed even this torrid market...

AAPL CLIMBED HIGHER ALL WEEK DRIVING OUR 340/360 DEBIT SPREAD TO A FIVE-DAY THIRTY-PERCENT OPEN GAIN!

With earnings on Apple's immediate horizon the stock should continue to drive higher-- and so should our profits.

The market has climbed a whopping 25% since August just five months ago and many are calling for a reversal. But with earnings season really heating up this week we've got the fuel to keep climbing---to get an idea where the profits are now let's take a good look at...

WHICH WAY THIS MARKET IS HEADED

The S&P-500 closed up 1.71% for the week stretching its streak to seven weeks---the longest winning streak since May 2007. The markets are looking extremely overbought but with some high-profile earnings coming out this week they could easily climb even higher. Uptrend support has now risen to 1275.

The Nasdaq posted a solid breakout on the strength in the chip sector after Intel's earnings Thursday. Apple and IBM report on Tuesday and are guaranteed to move big. Nothing suggests either company will disappoint and the excitement level is pretty high. If we do see a big spike higher it would not be surprising to see some selling into that strength--like we saw on Intel Friday.

This is a big week for the Q4 earnings cycle with the several of the tech blue chip companies reporting. The market is closed on Monday so there are no major reports but Apple and IBM are the big dogs on Tuesday followed by EBay and Goldman on Wednesday and Google on Thursday. Bank of America and General Electric close out the week on Friday.

The banks will produce some interest from traders but in general we already know they will beat estimates. After the JPM earnings on Friday those expectations are pretty strong. The earnings from Apple and Google will be highlights because of their exploding businesses and the competition between them. Expectations for Apple are off the charts but Google expectations are more subdued. IBM will be a key for the business sector because they are a corporate supplier rather than a consumer company. It should be an interesting week.

Earnings for Q4 for the S&P-500 are now expected to show 32% growth led by triple digit gains in the financial sector. Quite a few of the earnings reports this week are banks. Bank after bank beating estimates should produce some positive market sentiment.

Intel reported great earnings on Thursday and opened higher Friday morning but sellers quickly sold the stock to a loss. Intel did drive the chip equipment sector however with all the big names posting large gains on expectations of big capex spending in 2011. The 100% depreciation bonus in the tax bill is a huge incentive to buy equipment in 2011. KLA-Tencor (KLAC) rose +6%, Altera (ALTR) gained +6.4%, Novellus (NVLS) rallied +12% and Applied Materials (AMAT) jumped +7%.

JP Morgan reported earnings on Friday of $1.12 beating street estimates of one dollar a share. That compares to 74-cents in the year ago quarter. The +47% rise in earnings came on a revival in consumer banking and lower reserves for loan losses--a line we're likely to see repeated many times in the coming week.

This market is extremely bullish right now and this week's earnings could see some nice gains. Negative economic news at the open Friday was barely able to dent the indexes before dip buyers jumped in (on everything except Intel).

Inflation is starting to be seen in the Consumer Price Index jumping +0.5% last month--well over the +0.1% rise in prices for the prior month. This was the biggest jump since early 2009. Energy prices rose +4.6% in December and are now up +7.9% over the same period in 2010.

Food has not really spiked yet in the U.S. but given the rise in grain prices and the impact of grain not only on bread, flour and cereal but also on beef, chicken and other livestock we are going to see prices rise.

However because the core rate remains tame for the time being there is no worry the Fed will change its strategy--interest rates should stay contained for a few more months.

Also roiling the market Friday was a lower than expected Retail Sales number for December. The headline number came in at +0.6% compared to estimates for +0.8%. That was still the biggest rise since July. Sales closed the year at +7.9% over their year-ago level. Unfortunately most of that growth came in sales at service stations where fuel prices have been rising steadily.

So we've got extremely bullish market sentiment, several big earnings announcements this week and a market bumping up against resistance--the question is...

HOW DO WE MAKE MONEY ON IT?

We've got two high-potential trades lined up for this week. The first is on a well--know financial sector stock getting ready to announce earnings soon---and liable to ignite one-way or the other. The beauty of this trade is we can position ourselves 'both ways' buying all the way out to February for just .55 cents COMBINED! Heck if the stock sneezes we'll make a profit!

Our second trade has one of the most beautiful chart set-ups for an explosive move higher you've ever seen--and we can buy some in-the-money calls for less than 1.50 on a stock that trades over fifty dollars and is launching higher for what looks to be some stellar profits!

This is earnings season and we've got some explosive potential--so let's get moving...

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