Weekly Market Assessment
It's not going to happen! Federal Reserve raising rates is mentioned what seems like every minute. Will it happen? How will it effect the market? If they do it, it will be so incremental that it may have little to no effect on the market. Similar to the buildup to ending of QE (Quantitative Easing) everyone thought that would be the end of the bull market. However, that has come and gone and it seems like myself along with everyone else has totally forgotten about the predictions people made about how devastating it would be once the punch bowl got taken away. The reason for this constant talk is, I think, people trying to time a top in the market. This is almost impossible and the few that do, have been either calling for it for a long time or just plain luck. Do investors really think that the minute the rate hike happens that the equity market will just tank? I just don't see it that way. What further gives fuel to this rate hike fire is the fact we are at all time highs in many markets.
Mark my words, there will not be a rate hike this year! Janet Yellen among other Federal Reserve members have openly and consistently expressed that their decision to hike rates is data dependent! Which means that inflation needs to be near their 2% mandate (it currently sits below 1%). We have been keeping the flood gates open with record level low rates for years and the trend has been moving to the downside not in the direction to the Fed's mandate of 2%. So, could we see a sudden pop in inflation during the last 6 months of the year? I highly doubt it! So for now, there is no alternative (TINA) but to invest in equities as this asset class continues to provide a return on investment. However, the fear of a rate hike has created uncertainty as to how the equity market will respond since we would be leaving a level in interest rates never before seen. It seems like a majority of investors see this rate event as a bad thing, however a raise in rates would signify a recovery from the recession and express strength in the economy has returned! Instead of looking at interest rates going up, one should look at it as a normalization of rates, which should be received as a positive not a negative catalyst! So for the rest of the year it looks like the flood gates will remain open and the flow of liquidity thru low interest rates is here to stay! 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. 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)-Bought and sold a JUL2 212 "PUT".
National Bank of Greece (NBG)- This is a huge spec play in regards to Greek staying in the Eurozone or leaving it. I have bought shares in the Greek Bank thinking that they will be bailed out and more liquidity will be offered to the Greeks while also remaining the European Union.
Oracle (ORCL)-After reporting its earnings after the close on wednesday ORCL came in below analyst estimates however listening to management discuss the quarter on the conference call they made you think different. It dropped more than 10% on the open and dipped below its 200 day average, where it has found support in previous selloffs. I purchased JUL1 $41 "CALLS". ORCL has rallied significantly off its days lows and is now back above its 200 day average!
GoPro (GPRO)- I have bought shares in GPRO at $57.68. Its looks to have support at some major moving average and after Ambarella (which supplies the cameras) beat on its earnings gave a better insight to how GPRO was doing.
Twitter (TWTR)- TWTR's CEO, Dick Costello, announced he was stepping down and the stock reacted positively as many have been calling for him to resign. I have again bought JUL "CALLS" at $32. I have also purchased common shares of TWTR at 35.95