Weekly Market Assessment
Its back! Its that satisfied feeling you get when you hit new highs day after day - complacency! As investors are becoming accustom to new highs, they are also ignoring the surrounding events that have inevitably hit the market. Rebels in Iraq have shot oil up over 5%, Russian tanks have "supposedly" crossed into eastern Ukraine, and an unexpected shakeup on the Hill by House Majority leader Cantor stepping down, has created quite the environment for the markets. Blend all these together and you get uncertainty in a market that looks to be on cruise control - DOW 17,000 and S&P 500 to 2000! The Volatility Index (VIX) hit lows not seen since 2007! A lot to take in when everything looked so simple. What always amazes me is how much can change in the markets in just a few days. Remember the Teppper comment from last week? "My market concerns have been alleviated." If a continued selloff occurs that comment will no longer look so coincidental!
Have we become complacent in this new market? We are becoming more confident that yields are going to remain low and that with time our assets should continue to appreciate as the economy regains its strength and forgets about the past. Has this created blinders to the surrounding events that should effect our markets? Little seems to happen when consumer sentiment comes in below expectations or home sales numbers disappoint from prior years numbers. There seems to be a lot of red flags out there, however, the market seems to ignore them all and continues on its way.
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.
From the Trading Floor to the Option Pit: A quick look at whats on the trading desk
S&P 500 (SPX) - As mentioned last week I bought a Vertical "PUT" Spread at 1945/1940. We have now gained over 5% for the year in the market and I'm looking for a short term pullback after the past two big days where the ECB meeting and jobs report has pushed this market into new highs. I need the S&P 500 to close or trade into and below 1945, currently sits at 1949. The S&P finished the week at 1934 giving me a week option gain of 15%. Apple
(AAPL) - As mentioned in the watchlist last week AAPL split its stock on Monday and opened at $92. I picked up weekly "CALL" options at a strike price at $93.50. Sold this weekly option on Tuesday for a 49% option gain.
NetFlix (NFLX) - I sold the Vertical "PUT" spread at $430/$427.50, mentioned last week for a 17% option gain for the week as NFLX closed Friday at ~$427.