Go small caps, go!
The Russell is bumping right up against our 10% line and it's always a good sign when we have to contemplate drawing the next set of lines on our Big Chart but, let's not get ahead of ourselves as the poor Dow is dragging behind – down 11% from the Russell on our performance measure and down 8% for the year, overall.
As we were discussing in Member Chat this morning – this is not surprising to us as we had done an extensive review of the Dow back on September 25th, where we decided at the time that there weren't enough bullish fundamentals to justify a move over our Must Hold line and that kept us from being bullish at the top of that rally.
Now we're back at about the same place we were then and we'll have to watch those Dow component earnings reports very closely to see if we can justify at least a 1.5% move up past 13,600 (our Must Hold level) and then another 5% to 14,400 (these levels don't base off 13,600 but off the real long-term goal of 16,000 that we're nowhere near yet but were predicted under our 5% Rule way back in 2009).
We got a good start with AA yesterday, not so much boosting AA (but we're long), but easing concerns about a continued Global slowdown. Flat we can handle, slow growth is downright thrilling and, as I said in yesterday's post, sentiment is too negative and we're now climbing that proverbial wall of worry as we put our Trillion Dollar coins to work in the markets.
In addition to the bullish long trade idea I gave you on AA in Tuesday morning's post (we don't need to wait for earnings when we know what's going to happen), which is already up 10% on the short puts and up 24% on the net .70 spread (now .87 and on track to a full 200% gain), we also hit the nail on the head by calling the AAPL bottom at $513 (and back to our $531 bounce target this morning) and our BA prediction is already paying off with those short 2015 $55 puts down from $4.30 back to $3.70 (up 14%) and the $70 puts hitting our $10 target on the nose and now back…