HI Financial Services
who cannot master their emotions are ill-suited to profit from the investment
process.– Benjamin Graham
What has been happening
so far this week?
Another volatile week. Let’s
just say 3 weeks in a row. Another 300
plus point drop on a Monday and I still hear economic reports aren’t that
important. I guess the market just thought
that the ISM index number wasn’t important for the US even though the China ISM
number started a 300 point drop last week.
Yes the economic reports are important and our market not only reacts to
the US economic reports but China’s as well.
We are becoming a global economy and the world is now reacting to a “global”
slowdown in the economies that “matter” in our market.
Why does this matter?
WE clearly had a downturn in the S&P 500, Dow, Nasdaq, etc… The S&P 500 is our benchmark. Levels of Support were broken – 1825, 1800, 1776
and 1750 yesterday. Technically we are
bearish. For your trading when you now
have had a VERY confirmed bearish downtrend did you add protection? Did you created more of a negative
delta? Did you at least lower the
overall delta in your portfolio? If
not call me at 888-287-1030 and let’s talk tomorrow!Anything made up on the
way down is a profit when they come back.
Collar trading or more of an investment approach has worked
especially with a stock like AAPL, V, BIDU, F, NVDA, DIS. And many others. Would you like to see AAPL profitable collar
If you went with the expectation AAPL would run
you still could have protected AAPL out to March at $550
Where will our market end
I don’t have a
clue! Why? The non-farm payroll is the key to an up week
after a pretty good 7% pullback. I
couldn’t give you an idea where we are going but I would expect we get a
correction which means 10% downside movement in our market. I get a lot of questions on when do I know
the pullback or correction is over. Easy
answer. When it stops and the market confirms
bullish movement on a chart. Yes technical’s
are important. No we will not catch the
bottom exactly but why would anybody try.
This is investing not gambling.
DJIA – Deep trouble is
the best explanation. The Dow broke the
200-SMA which is supposed to be a strong support level. Even worse is the way it acted as resistance
today. Technically speaking we are in
for a 10% correction. Good news is we
are at an oversold level on the RSI chart.
SPX – The S&P 500 is
not so bad. Currently it is sitting
between the 50-SMA and the 200-SMA.
Currently in no man’s land but small support at 1735 and big support at
1710. I could see it test 1710 to
complete the correction or pullback. Remember
it is considered healthy.
COMP – The best of the
three indexes as far as technical damage done.
Broke the 50-SMA but held a horizontal level of support at 4000. Got to love those round numbers. The trend is broken, technically bearish but
not much has to be done to repair the trend.
Where Will the SPX end February
I NEED to have an expectation
to set up my trade. Bearish market and
February is the second worst month in the market historically. I am not looking for an exact number but I
would expect a drop to test 1710 and maybe a finish at or slightly above
1750ish. The “ish” means around give or
take an many numbers as I need to add or subtract to be close.
1800 or higher –
would expect 10 points plus or minus from this level
1700 or lower
What is on tap for the
rest of the week?=
BSX, BWLD, CHRW, IP, BIDU
DIS, AKAM, HUM, TWX, TSO, RL,
AET, AOL, GM, K< LNKD, LGF, MWW,
Wed: MBA, ADP Employment,
Thur: Initial Claims,
Continuing Claims, Challenger Job Cuts, Trade Balance, Productivity, Unit Labor
Ave Workweek, Non-Farm Payroll, Private Payroll,
Unemployment Rate, Hourly Earnings, Consumer Credit
Wed – MI
Thurs – EMU: ECB
Announcement, DE: Manufacturing Orders
Friday – DE: Industrial
Production, GB:Industrial Production,
How I am looking to
Protective puts are in
place. Look at last week to see the
positions as I cut and pasted them into last week’s notes. I’ve added long puts in some accounts as the
SPX broke 1776 and 1750. Some stocks now
have short calls to make up some of the downside movement – AAPL, DE, F, SNDK,
It was mentioned to me: “We
are obviously in a bearish market so wouldn’t we want to be in a delta negative
position?” The answer is yes. We want to be able to make more money to the
downside than stocks are losing. This
pullback or correction is expected so you should be investing accordingly.
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Yield Spread Model Calls For 2014 Stock Market Low
Momentum Stocks: Baidu Inc (ADR) (NASDAQ:BIDU), Linn Energy LLC
(NASDAQ:LINE), 3D Systems Corporation (NYSEDD), Zynga Inc (NASDAQ:ZNGA)