Weekly Market Assessment
The saying goes, never short a dull market. The past two weeks have been full of extreme moves up but then again, extreme moves down. We contentedly see the DOW open over 200 points, only to watch a slow steady death of all those gains. The same holds true with harsh negative opens that creep up to end the day in positive territory! These huge reversals, of course, happen at the 200 day moving average. This moving average is used by almost every investor for market sentiment and overall strength. We are approaching the average from above, so a break below signals weakness in the market and a bounce off of it expresses strength. So a back and forth battle has ensued and, so far, its beginning to take a familiar shape, when this level is tested, buyers win out! The last time we broke below this average was in October of 2014 and we rallied 10%. The time before that was in 2012, since then we have gained over 42%! Has another great buying opportunity presented itself? Just looking at these two small examples should answer that question, however this comes at a time where the China stock market has collapsed ~35% in three weeks... fears over Greece leaving the Eurozone and Puerto Rico potentially defaulting on over $65 Billion of debt. The most money is made when the most risk is taken nevertheless, doing this is much more challenging than simply saying.
As we enter earnings season the market has remained in a very tight range. Trading with +/- 1% since the start of the year. Have we reached a market peak, where smart investors are unloading their shares to the less informed or are we building another base to move further to the upside? Anyone who has been shorting the market these past years have been burned for obvious reasons and right now after hitting and dropping below a major moving average, in addition to bouncing, showed how you just can't short this market. Investors will be looking for companies that can continue to beat on the top and bottom line which should signify a further move to the upside... giving confidence that the market is fairly valued and not looking overheated in terms of valuations. As of last week, the NASDAQ has broken above previous all time highs and closed in record territory! So for now, we remain in a holding pattern waiting to see who will flinch first and decide which direction we head!
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)- Still holding this position with an average price at $1.01. The Eurozone members will meet on Sunday to either accept or regret Greece's new proposals on austerity measures and debt relief of Greece. Huge spec play, however i find it a good risk/reward profile and the odds of Greece leaving the Euro remain low.
VelocityShares 3x Long Crude Oil ETN (UWTI)- After a more than 10% less off on crude oil, the $50 support level is coming under pressure and I'm looking for it to hold here as it is a major psychological and technical level. This is also at the 61.8% retracement level from the highs of this year. I have purchased shares in this ETN and hold a cost basis at $2.01
Tesla (TSLA)- After retesting all time highs I bought JUL 277.50 "PUT" and sold it the following monday for a significant 1 day gain. This came after an analyst firm downgraded the stock and with a major sell off in the overall market on Monday.
Apple (AAPL)- After falling to its 200 day moving average, I bought a JUL5 $125 "CALL" option as AAPL reports its earnings after the close on Tuesday!
GoPro (GPRO)- I have bought shares in GPRO at $55.94. 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. I have also purchased a weekly Vertical "CALL" Spread at $59/62 as GPRO reports its earnings after the close on Tuesday!