Weekly Market Assessment
A market rally with no respect. Day after day and week after week, I read and hear analyst, investment bankers, authors and TV anchors preaching that the end is coming and its going to be bad. Every time we hit a new high, the worst comes out; the market is running on fumes, scary correction ahead, 60% correction in the DOW and S&P 500, and as always, the bubble is about to burst! All of these draw the eyes of myself and the other millions of viewers that are interested in how this writer/commentator/analyst came up with how its going to happen. However, it seems like we are running into new highs every week. S&P 500 hit and closed above 2000 this week even on the backs of all the geopolitical risks around the world. The investors who remain short are only fueling this market into new highs as they are forced to cover their shorts and buy their shares back essentially pushing the market even higher. Are all these contrarians correct and are we the ones going to be left "holding the bag"?
What is for sure is we are currently up ~8.5% this year! When most thought we needed a little rest from last years killer market gains. I will keep the Federal Reserve policies out this one time. If you have ever gambled and walked up to a roulette table and saw it land on black 3 times in a row, then laid down your one bet thinking, red has to hit this time - that is not how probabilities work. The table or ball has no memory of what happened before and begins like every other time with a 50/50 chance (disregarding green). Each play is an independent event, the market works the same way. For a healthy market to progress, we need these short term resets however it doesn't play out like most would think in comparison to a roulette. Just because we had a great year/month/week or day doesn't mean it cant continue on! Stock prices follow earnings growth. If earnings continue to grow, we should continue to see an expansion into the equity market. Like the career of Rodney Dangerfield, this market gets no respect!
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) -To protect my net long positions I have purchased a weekly Vertical "PUT" Spread at 1995/2000.
FireEye (FEYE)- I got out of my Iron Condor for a 12% option loss that was used to protect my long position in FEYE, which is now up 11% as I continue to hold these common shares.
T-Mobile (TMUS)- New takeover rumors are coming out with the majority owner of TMUS, Deutsche Telekom, who own ~65% of TMUS said that they would accept offers for a takeover of $35 or more. As mentioned last week I have purchased shares at $29.25 and continue to hold them, TMUS now sits at $30.08 after this recent news.