Weekly Market Assessment
The theory goes that if the month of January is up, then so goes the rest of the year! With 2013 now in the books, it is safe to say 2013 was one of the most hated bull markets in the past decade. The Dow Jones had a 29% return in 2013, while fighting off numerous events that should have jeopardized this epic year. When looking back, it is amazing how many obstacles the market went through: debt ceiling negotiations, government shutdowns, flash crashes, Syria, Cypress Bank failures, and of course fear of the Taper, to name a few. How will the market in 2014 react to future headwinds or other situations that threaten the stability of what is by some being considered a secular bull market?! We opened up the year down 130 points, compared to last years commencement of 300+ points. The 10 year Treasury Bond is now at 3% compared to 1.86% at the beginning of 2013. While gold had one of its worst years in 30 years with losses of ~30%! Looking back, obviously we now know the equity market was the place to be even though it faced numerous challenges.
Will we see a 5-10% correction from these new all time highs, where the market now sits 16% above the 2008 top? Can the same strategy that worked in 2013 of buying on the dips/correction at the moving averages continue to pay off? With earning season starting next week, we should get a glimpse of how companies are viewing 2014. Fear of the unknow leads to uncertainity however this uncertainty should create a buying opportunity if the market are finally able to stand on their own and provide a foundation that may give us another year of historical returns!
Through the Looking Glass: My Perspective on Stocks Reactions to Market Conditions
Next week we get the Jobs Report. We should see an increase in the jobs created due to seasonality. Ill be looking to buy the SPX on any dip before the report as it seems that good news is now finally a good sign for the market.
From the Trading Floor to the Option Pit: A quick look at whats on the trading desk
S&P 500 (SPX)- I sold a Vertical "CALL" Spread at 1845/1850. This area continues to be major resistance for the S&P 500. An option gain of 30% for the week. I'll be looking to sell more Vertical Spreads at this level if conditions remain the same.
Hertz Global Holdings (HTZ)- purchased a Jan $30 "CALL" on reports that Carl Icahn has been buying up shares (30-40 million shares) of HTZ. Currently trades at $28.50
Priceline (PCLN)- Sold a Vertical "CALL" Spread at $1165/1167.50. PCLN has been trading in a range while also finding resistance at its 10 and 20 day moving average. The 10 moving average also crossed below the 20 average which is a bearish sign. Had a week gain of 28% on this option trade.
SPDR Gold Shares (GLD)- Gold bullion has again dropped below $1200 level and reached a previous low where GLD found support and then rallied 3% off this level. I purchased a FEB $115 "CALL". Looking for a bounce back in gold after being down ~30% this year and trading below the psychological $1200 level.