This week, the market is taking a breather after a big run-up. The strongest companies report early and we typically see a rally as earnings season kicks off. During the last three quarters, stocks have retreated after the first few weeks of releases. Bulls have been able to push stocks higher uncontested. Concerns over a European credit crisis have eased and the economic calendar has been light. The Eurodollar has rebounded and some of the PIIGS bond yields have actually pulled back slightly. The bank stress test (although it was a joke) has also calmed nerves. The issues have not been …
Yesterday, the market convincingly broke through resistance at SPY 110 and it closed right at the 200-day moving average. Earnings have been excellent and we have had a reprieve from Euro credit crisis and from economic releases. This morning, DuPont blew away estimates and we have another cyclical stock that is marching higher and giving good guidance. FedEx raised its forecast yesterday and described improving transportation activity. Bulls have the ball and they are running with it. Interest rates are low and stock valuations are reasonable so Asset Managers are putting money back into equities. From a return standpoint, Asset Managers …
Last week, the market did not have to fight off bad economic/credit news and it was able to rally higher on good earnings. Corporations are making great money and balance sheets are strong. Typically, earnings season kicks off with some of the strongest companies reporting early. Economic conditions have been gradually deteriorating and there weren't any major releases last week. That will change a little this week and consumer confidence, durable goods orders, the Beige Book, initial claims, GDP, Chicago PMI and consumer sentiment will be released. Durable goods orders have been volatile and given solid earnings from Ford and Whirlpool, …
After a huge run-up yesterday, the markets are fairly quiet this morning. Earnings came out pretty much as expected and gainers and losers have balanced each other out. The S&P 500 futures are unchanged 20 minutes into trading. Cyclical stocks led the rally yesterday after 3M, UPS and Caterpillar posted solid numbers. The earnings for Monday are fairly light and so is the economic calendar. For now, the market is clearly focused on the European bank "stress test". That news will start to hit the market at 12 o'clock EST. That is when European markets close and traders will have the …
This option trading blog nearly concludes my series on "How I Trade Options". After all of the research and analysis has been completed, I step back and I evaluate my level of confidence by breaking it into three categories; the market, the stock, recent performance. My option strategy will depend on where I am in the confidence spectrum. At the highest extreme I would be buying front month out of the money options. At the low end I would be selling out of the money naked put options on a stock I like fundamentally - in a scaled manner. The Market …
