Due to the fact that the July 4th Holiday falls on Wednesday, our weekly webinar will be moved to Tuesday July 3rd.
It will be held at 1:00 PM EST.
I hope you can attend, but if you cannot, it will be recorded and posted in the member’s area.
Before I continue with a discussion of the market, I need to remind you that the markets close tomorrow at 1:00. And they will remain closed on the 4th.
There were a couple of nice moves off the earnings announcements last week.
The big earnings winner last week was RIMM. Though it only dropped $1.79, it represented a 19.6% loss.
NKE dropped $9.11 of their announcement, which was a 9.4% drop.
And FINL was up $2.23, which was good for an 11.9% move.
Companies reporting this week are …
7/2-Monday after the close:
It is a very light week due to the fact that this is the last week of this season.
Next Monday, the next quarter starts off with Alcoa reporting.
I need to point out that you need to do your own analysis and research, if you intend to take a position based on an earnings report. As you know, the trade is based on unexpected volatility.
You need to double check the release dates, due to the fact that changes can be made.
Now onto the markets.
On last week’s webinar, I mentioned that the S & P 500 had held the support line of 1,312.
No sooner did I say that, and on Thursday the market proceeded to sell off and retest it again.
The market proceeded to drop to 1,313 and in the last 1/2 hour of trading it screamed up ovet 16 points.
The action followed through on Friday when the S & P 500 hit a high of 1,366.
So, in two days the S & P 500 ran 53 points.
This type of price action is designed to fool the vast majority of traders and investors.
But as a member of Speed Retirement, you no doubt recognized the key price levels and where support should be.
And you also knew the trigger was when the VIX could not get through 21.88 last Thursday.
The end result is that the all major markets closed up for the week.
The S & P 500 ended closing up 27.14 points or 2.03% for the week. The close was 1,362.16 or less than 13 points from the next major resistance level of 1,375.
The DOW closed the week up 239 points for a 1.89% gain.
And the NASD Composite closed up 1.47% for a gain of 42.63 points.
For the monthly timeframe, all markets ended June with a bullish reversal bar.
The objective on the S & P 500 remains at 1,375. If the S & P 500 can close above 1,351 today, then I fully expect that target to be hit.
After 1,375, the objective is 1,406.
On the downside, 1,343 should act as support.
Last week, I mentioned the upside resistance on the S & P 500 was in the 1,357 to 1,359 area.
The fact that we are trading at 1,359, as I write this, does not shock me. Nor does the fact that the market may struggle to try and get through this price level.
The market was turned back the first time it tried to get through this area, so if we can get cleanly through it would clear the way for further upside.
All chart timeframes still remain in an uptrend. The 60 minute chart crossed to the upside last week.
Both sentiment indicators I like to look at have turned up.
The Bullish % Index bottomed at 44.60% in early June and now stands at 55.8%.
The % of stocks above their 200 day moving average bottomed at 44.4% in early June and now reads 63.6%.
As I said last week, “moves will tend to be fast in either direction and you need to be nimble.” Thursday and Friday’s price action certainly attest to this.
We need to keep an eye on the VIX to help us determine where the markets should turn.
The support lines on the VIX are 17.19, 15.60 and 14.06.
The resistance levels are 21.88, 20.31 and 18.75.
Here are our open positions:
We are now sitting with an adjusted basis on WDC of $24.53, after our option activity. There is no doubt that WDC is oversold. It is now trading at under a 7 PE. It appears that WDC held the support line of $28.13. I would look to add to WDC on the violation of last week’s high.
The insiders continue to pick up shares of the stock, but it seems to have done little to stem the sell off. This is another stock that is oversold. The key price support line on TIE is $10.94, which was taken out. On the next rally, I will suggest put protection and sell calls.
It does appear to have bottomed and is now working it’s way up. I will suggest we add to this position if the market appears to be holding support.
We are down about 37% at the moment. Like RDN, this is another position I would add to, assuming the market cooperates with us. It is now trading at under a 5 PE. The 50 has crossed above the 200 on the 60 minute chart.
We are down about 32% on HOGS. HOGS is down slightly today, but the deal with the Chairman is still on the table, so we have to wait to see what the outcome will be. HOGS continues to trade in a tight range pending the resolution of the deal.
We are down about 30% on the stock and up 10% from the sale of call options. DNR had a strong bullish reversal last week.
We are down about 13% from our entry. NVDA is another holding that is seriously oversold. Another broker just upgraded NVDA to a buy. NVDA got a push up after the 50 crossed above the 200 on the 60 minute chart. If it can hold above $13.28, it should try and make a run back up to the $16 area.
We are flat on our entry, but we collected what has amounted to almost 16% of our purchase by selling call options. If it remains above $13 by July 20th, we will book the profit.
We paid $20.85 for MS and collected a small amount of call premium. It looked like MS has bottomed and is starting to work it’s way back up.
Another stock sitting with a large cash position that amounts to almost $4 per share or 1/3rd it’s market price. I will be looking to add put protection.
We are up about 3% from our entry. You should have received your $.37 per share dividend on Friday.
We added FSLR again on June 26th. You should have bought back the June 29th $15 call and booked a profit of $.41. We now have the July 6th call short, when we sold it for $.46. It is trading just above the $15 strike and if it remains above that price this Friday, we will book almost a 6% profit for holding it 1 1/2 weeks.