Weekly Market Assessment
The week of triple digit moves! This past week we saw 5 straight days of the DOW moving in ether direction 100+ points. That's called welcome back volatility! On Thursday, commentators were saying that this 265+ point sell-off was the worst day for the market since July. On Friday, we had another triple digit move of 175+ point, in what was said, as being the best day for stocks in 7 months. Try and understand what that does to your thought process when trying to gauge where one might be thinking the market is heading and whether to buy, sell or hold a position overnight! We saw a jump in the VIX (volatility index) which is standard, however, there was little change in the 10 Year Treasury Bond, which held above the 2.5% level. This was one small sign of confidence that the market wasn't falling apart however, everyone was screaming from the high heavens how the correction was finally here! We've heard this story before.
On Thursday it looked like the correction had finally arrived! Rumor mongering started first with how Russia may start seizing foreign assets, to then how the Federal Reserve could start tightening interest rates sooner than expected, to finally how the strength in the U.S. dollar was going to be hurting exports on the multinationals earnings. It always amazes me how many excuses or reasons we can come up with for just one down day. Isn't it possible to have stocks go down for once? Or have we become so accustom to having the market break new highs every week! Come Friday, this was all forgotten and the market rallied on as if yesterday never happened! We seem to want a correction so bad that the very hint of one starts a race to the exits and the beginnings of hundreds of news articles followed by commentators emphasizing how and why its happening. We are then lead into, "I have to get out now", and "buy gold for protection", only to be lead astray and left holding the bag as the market reverses its course and forgets what just occurred. It reminds me of a quote I recently heard about portfolio management, "It's not about predicting the rain, it's about building an Ark."
The Rant: Going Off on a Tangent with my 2 cents
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) -Put on a Vertical "PUT" Spread on Monday and was able to exit it on Tuesday for an option gain of 22%.
Yahoo (YHOO)-I have bought common shares at $39.90. StarBoard Value has taken a significant position in YHOO and is looking to push YHOO into pursuing a strategic partnership with AOL. I have also bought weekly "PUTS" to protect my position below $40. Ill be looking to trade around this position by selling Spreads
Cliffs Natural Resources (CLF)- I have purchased common shares of CLF at $12.15, this position continues to get beaten down due to low iron ore prices and concerned growth in China. There is a well know activist investor in there who has now won a proxy fight and has placed 6 new directors to the board and hired a new CEO. They're looking to sell off non core assets and cut cost which this activist investor has been know to do in the past.