Weekly Market Assessment
Finally we have broken and closed in the S&P 500 at new highs! What looked liked an inevitable feat after 3 days of breaking above all time highs, then selling off into the close below the previous high has ended for now! We currently sit on the NASDAQ and S&P 500 at 14 year highs. As usual, we again become skeptical of where do we go from here? The 10 Year Treasury bond is sitting right at it's 200 day average at 2.67% and gold looks to have found support above the $1300 mark. Janet Yellen (our new Federal Reserve Chair) spoke on Wednesday and further soothed the market with continued support of the economy and expressed no signs of inflation or asset bubbles stemming from the loose monetary polices. This of course gave the market the fuel to break above the 1850 mark and into record highs.
Next week we get the Jobs Report. The past two have come in way below expectations, with all the blame going towards the weather. Will this be the 3rd time and if so, will the market accept this or recognize this as just another small blip in the economic recovery. What I find interesting is the fact that Treasury Bond yields continue to drop, meaning investors are going into these assets, which drops the yield and raises the bond price. Why is this occurring when the equity markets are breaking into new territory not seen in decades? My past outlooks have remained caution of the continued new highs and what comes to mind is an old adage, that the Market takes the stairs up and the elevator down. The questions is, have we reached another top or are we heading up another flight of stairs!?
Through the Looking Glass: My Perspective on Stocks Reactions to Market Conditions
Next week we get the Jobs Report and earnings from NuSkin (NUS). On the Jobs report as mentioned below, I am selling a weekly Vertical Call Spread on the SPX at 1890/1895, as weather should again play a factor making this the 3rd bad report and i feel that the market may not be accepting this excuse much longer. With NUS, there should be plenty of volatility and with the past allegations that NUS is operating a pyramid scheme in China and an open investigation from Chinese officials has begun. This should bring some big moves in the stock with alot of eyes and ears listening to the conference call and what come out of it. Wide spread Iron Condor will most likely be used to play this earnings report.
As mentioned last week on earnings from TOL and SHLD, both surprised on earnings and I took a loss on both plays!
Making the Watchlist: Below are the stocks that I will be looking at over the coming months. I will provide the the current stock price, and why I am watching them. I will comment on them as I continue to keep an eye on them. You will be able to see and follow their growth and/or decline. Chart links may be attached.
Zillow (Z) $85.68- as mentioned last week Z was approaching its 200 day moving average for the 5th time. It hit and bounced off this average and has returned 9% since last mentioned.
From the Trading Floor to the Option Pit: A quick look at whats on the trading desk
S&P 500 (SPX)- I am selling a weekly Vertical "CALL" Spread at 1890/1895 going into the jobs report next Friday.
NuSkin (NUS)- Looking at earnings after the close on Monday. I sold MAR $95/100 and $70/65 Iron Condors. The 100 day moving average is at $101 and should act as resistance and $70 is right above its 52 week low. This range along with a spike in volatility going into earning should create plenty of option premium that will disappear once the earnings are released.