by Greg - October 22nd, 2014 5:40 pm
Join us for the PSW Conference where you'll learn:
- To BE THE HOUSE – Not the Gambler!!!
- How to critically analyze today's markets and economy
- What strategies to apply to the current market conditions
- When to hold your trades and when to fix them for bigger gains
- How to use futures to leverage portfolio returns
- How to incorporate fundamental analysis for long-term wins
- The investing trends that will matter next year
- Our top stock picks for 2015
by Option Review - October 22nd, 2014 5:38 pm
by phil - October 22nd, 2014 8:07 am
What an amazing recovery!
Just one week ago the World was coming to and end and now everyone has their rally caps back on. Investors really are sheep – except I think sheep have better memories… We're still right on plan of dropping 10% and then bouncing 4% (strong bounces) by Wednesday (today) that was initiated on October 6th by our friends at the Fed (see yesterday's post for the summary). For those of you keeping score, our strong bounce predictions for today were:
The Dow is just 17 points away from our goal and we'll just need the NYSE and the Russell to confirm their bounce lines and THEN we can get bullish again. Meanwhile, we actually got a bit more bearish in our Short-Term Portfolio (also in yesterday's post) as our Long-Term Portfolio popped right back to up 18.1% for the year so we wanted to lock those gains in with the STP, which finished the day up 81.8%, down from 92% in the morning as the markets rocketed.
by phil - October 21st, 2014 8:23 am
It LOOKS impressive, doesn't it?
As I said to our Members this morning in our Live Chat Room, all is going according to plan, as we expected to see strong bounces in our indexes by Wednesday – no matter what news or earnings turned out to be. If the powers that be want the market to bounce – it bounces.
Our general rule of thumb is that dip buyers only learn their lesson after they have been burned 3 times and, so far, only the August dip buyers are being relly burned but a failure to retake that line and a move lower – that might get them to think twice about mounting another rescue effort next time we test 1,050 on the Russell.
On this next chart, you can see how the various Fed speakers were used at key inflection points to guide the markets exactly where they wanted them to go.
As you can see from this S&P chart with Fed notes attached, the manipulation we told you about on 10/6 (see: "Market Mayhem – 12 Fed Speeches in 5 Days Causes Chaos") is merely playing out according to plan and this is why we were able to take full advantage of both the dip (see: "Money-Making Monday: How to Profit from a Market Correction") and the bounce (see: "Wednesday Market Weakness – Oil Collapses to $80, Good or Bad?").
In fact, the TNA Oct $58/60.50 bull call spread that we pointed out last Wednesday at $1.12 closed on Friday morning at $2.40 – up a very nice 114% in 48 hours for those of you who get our morning newsletter (which you can subscribe to here). Our suggested roll to the Nov $56/63 bull call spread at $3 still has to play out but, so far, we're at $4, so up 33% in 4 trading days is "on track" towards our planned 133% gain in 30 more days.
by Sabrient - October 20th, 2014 11:27 pm
Courtesy of Sabrient Systems and Gradient Analytics
Last week brought even more stock market weakness and volatility as the selloff became self-perpetuating, with nobody mid-day on Wednesday wanting to be the last guy left holding equities. Hedge funds and other weak holders exacerbated the situation. But the extreme volatility and panic selling finally led some bulls (along with many corporate insiders) to summon a little backbone and buy into weakness, and the market finished the week on a high note, with continued momentum likely into the first part of this week.
Despite concerns about global economic growth and a persistent lack of inflation, especially given all the global quantitative easing, fundamentals for U.S. stocks still look good, and I believe this overdue correction ultimately will shape up to be a great buying opportunity — i.e., there is no need for investors to be afraid of the very thing they have been hoping for. Also, the charts are looking exhausted to the downside, and our fundamentals-based rankings remain slightly bullish.
In this weekly update, I give my view of the current market environment, offer a technical analysis of the S&P 500 chart, review our weekly fundamentals-based SectorCast rankings of the ten U.S. business sectors, and then offer up some actionable trading ideas, including a sector rotation strategy using ETFs and an enhanced version using top-ranked stocks from the top-ranked sectors.
Three weeks ago, the market finished the first week of October oversold, and the following week it became extremely oversold, and then last week it reached severely oversold. Obviously, no matter how overbought or oversold the market gets, it can always get more so. However, investing is about stacking the odds in your favor, and the more severe technical conditions become, the greater the odds of a bounce or outright reversal.
As of Friday, the S&P 500 closed down -6% from its closing peak on September 18 (but on an intraday basis, the peak-to-trough pullback was -9.8%). The MSCI World Index is down -10% from its September 2 high.
The top performing sectors last week were Telecom, Industrial, and Basic Materials, but these three had fallen the most the prior week. For the month of October, Utilities is up about +2%, which is far more than everyone else. Consumer Goods/Staples is down less than -2%, and the others are worse (Energy is down…
by phil - October 20th, 2014 8:03 am
IBM spooked the markets this morning.
The Dow component missed on earnings and revenues by wide margins, reporting the worst quarter since Q1 of 2009, when the stock was under $100 so no surprise they dropped $14 (7.5%) from $182 to below $170. That gave us a great opportunity to short the Dow at 16,250 in our Live Member Chat Room and we caught a quick 50-point drop already (7:48) for a $250 per contract gain to start our week off right.
Fortunately, we followed through with our plan on Friday (see morning post) and flipped bearish again into Friday's close – the Futures trade was simply a way to take advantage of an obvious and immediate catalyst pre-market. We'll hear from two Fed doves this morning – Powell speaks at 10 but not much expected from him and Tarullo goes at noon and is bound to say something doveish if the market is read into lunch.
As to IBM – it's not as bad as it seems as IBM took a $4.7Bn one-time charge as they PAID GlobalFoundries $1.5Bn to take their money-losing semiconductor unit off their hands. I wish IBM had called me, I would have been happy to take their semiconductor unit for just $1.3Bn…
Still, we had IBM on our Buy List and were hoping they would come down so we could add them to one of our Porfolios but I don't like their "idea" of repositioning to more cloud computing, as I think that's really a commodity play with lower margins though I still believe in Watson and if you consider that IBM wrote off nearly $5 per share – the earnings weren't so terrible. So it's going to be watch and wait on IBM at $170 – hopefully they go lower and get irresistable but we're not going to run in and catch a falling knife on this one.
We'll also be keeping a very close eye on our levels this week and, as you can see from the Big Chart, we've found a bit of support (finally) but only at the weak bounce lines we were watching…