Weekly Market Assessment
The market can't catch a bid! Over the past six trading sessions the market has been in the red and this hasn't happened since last October. We are down over 800+ points since May and getting close to a 5% correction. However there seems to be no real sense of fear and panic. The fear index or VIX is trading below 15 which signals to me calm in the market. While the 10 year Treasury Bond trades above 2.25% and Gold continues to trade at multiple year lows, all of these are not screaming, "get out of the equity market!". Is the rug about to be pulled out beneath our feet or is this just a slow and methodical correction? For a healthy market to continue on its path from bottom left to top right we will have numerous pit stops where the market needs a break before its back onto the raceway fully fueled and fine tuned. However the market is also a discounting mechanism and looks out months before anything truly reveals itself, catching those that have finally chosen to enter the market at the wrong time. This is investing/trading at its finest, take on risk and enter the market or stay out and preserve principal only to miss out on another leg up. Depending on the choice one person makes will either make them look like a genius while the other remains stuck in a losing position thinking he zigged when he should've zagged!
The recent jobs report came out Friday showing 215,000 jobs were created, just under the estimated 225,000. The unemployment rate now sits at 5.3%. So it looks like one leg of the Federal Reserve's mandate of "maximum employment" has been fulfilled, now we are waiting for signs of inflation to kick in to bring on a tightening in yields. Everyone is now set on a September rate hike however when looking around the globe it still looks like the move should be put off till next year and that remains my outlook. China is still a concern, while Greece is waiting for its third bailout and crude oil along with other commodities have again fallen to their March lows, while the dollar continues to rise in the face of low rates. This is what gives me more confidence in standing by my prediction of a 2016 rate hike. We do not have inflation at or near the Feds mandate of 2%. Until that is reached I believe rates will remain unchanged. We also have to remember that across the globe, almost every major economy is still in a very accommodative low interest rate environment, where countries are trying to fight off any deflation worries. China, Japan, Europe and the United States are continuing to keep rates low to stimulate the economy to where higher rates will in the future be met with open arms, however for now I believe "we" don't want to be the odd man out.
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.
Apple (AAPL) $115.25- After missing on guidance for its 3rd quarter AAPL has sold off from its highs around $135. It has dropped below all of its major simple and exponential moving average. It trades a significant discount to its peer in term of it P/E ratio and when deducting its cash from this ratio its even more undervalued to its peers. For these reason it has been added to the watchlist.
See What I'm Trading:You can now view all my real-time trades by following this link, BlackPacific Capital . This new site shows my trades, in real time the minute they are bought and sold. Below you can also click on the stock symbols, trade strategy or prices which will lead you to this new site. The site offers a full risk/return profile and video detailing the strategy of the trade. Note: When looking at the option positions every contract equals 100 shares.
From the Trading Floor to the Option Pit: A quick look at whats on the trading desk:
S&P 500 (SPX) -No Trades
SPDR S&P 500 EFT (SPY)- After a selloff on Wednesday and a slow recovery in the market I bought an AUG $208 "CALL"
LifeLock (LOCK)- The FTC came out 2 weeks ago and said the company violated a previous settlement with the Federal Trade Commission. The stock lost more than 50% of its value and I believe this is way overdone. I have purchased common shares at $9.80 and August $7 "CALLS".
Twitter (TWTR)- I bought a AUG $28 "CALL" last Friday. On Monday they announced a partnership with the NFL and TWTR interim CEO Jack Dorsey bought more shares in the open market. This gota 5% pop on Monday and I still hold the option.
Fireeye (FEYE)- I bought a weekly $43/44 "CALL" Spread as it looks to have found support at its 150 day moving average. It has hit and bounced off this level 4 times while being held down by its 100 day average. A break above this level, i should be able to exit the position as volatility should become depressed.