5/5/2014 8:48:28 AM
Although the major indexes pulled back, key indexes moved higher...
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Value Portfolio:
Long SDRL at $33.90 on June 15, 2012 (Shares were put to us when options expired. We were paid $1.10 per share when we sold those options and bought shares for $35.00 each). We have collected dividends: March 5, 2014 $0.98, December 3, 2013 $0.95, September 5, 2013 $0.91, June 5, 2013 $0.88, $1.70 Dec 4, 2012, $0.84 Sep 4, 2012. Total = $5.28 in dividend payments.
Short FXE at $124.19 on August 24, 2012
Long UUP at $22.43 on August 24, 2012
Short FXE at $134.48 on October 4, 2013
Long SDRL at $35.43 on Feb 18, 2014
Long SDRL at $33.50 on March 21, 2014 (Shares were put to us when options expired. We were paid $1.50 per share when we sold those options and bought the shares for $35.00 each.
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Equities were mixed at the open with the Dow opening lower, the S&P-500 flat, and the NASDAQ-100 higher. All three closed with modest losses. The Dow Jones Transports (IYT 137.63 -0.48) posted a modest loss but shifted to an uptrend state. The Russell 2000 (IWM 112.03 +0.09) added a modest gain and closed below its 20- and 50-Day Moving Averages (DMAs) but remained above its 200-DMA. The Regional Bank Index (KRE 38.55 +0.20), and the Bank Index (KBE 32.08 +0.14) both closed fractionally higher and above their 200-DMAs. The Finance Sector ETF (XLF 21.99 -0.01) closed flat. Longer Term Bonds (TLT 112.71 +0.69) added a fractional gain and is at the upper end of its up trending channel. Trading volume was light with 695M shares traded on the NYSE. Trading volume on the NASDAQ was below average with 1.825B shares traded.
There were six economic reports of interest released:
- Nonfarm Payrolls (Apr) added 288K jobs versus an expected 210K jobs
- Nonfarm Private Payrolls (Apr) added 273K jobs versus an expected 205K jobs
- Unemployment Rate (Apr) fell to 6.3% versus an expected 6.6%
- Hourly Earnings (Apr) were flat (+0.0%) versus an expected +0.2% rise
- Average Workweek (Apr) came in at 34.5 hours as expected
- Factory Orders (Mar) rose +1.1% versus an expected +1.6% rise
The first five reports were released an hour before the open. The last report was released a half hour into the session.
We are watching gold for a potential reversal in the Gold Miners Index (GDX 24.32 +0.53) added two percent and Gold (GLD 125.06 +1.26) added one percent. Both GDX and GLD closed below their respective 20-, 50-, and 200-DMAs but are close to confronting those moving averages soon.
Apple (AAPL 592.58 -1.10) again rose modestly. AAPL constitutes about 20 percent of the NASDAQ-100 and nearly five percent of the S&P-500.
Seadrill Limited (SDRL 34.33 -0.11) slipped fractionally lower. It now trades above its 20- but below its 50-DMA and below its 200-DMA and is in a trading state. We sold March 2014 $35.00 put contracts for $150 at the open on Feb 18th and bought shares at $35.43. The stock is now trading ex-dividend for $0.98. The shares were put to us at $35.00 less the $1.50 per share we were paid for the puts, so we have an effective price of $33.50.
The U.S. dollar and the Euro were essentially unchanged.
The yield for the 10-year fell two basis points to close at2.59. The price of a barrel of crude oil rose thirty-four cents to close at $99.76.
The implied volatility for the S&P-500 (VIX 12.91 -0.34) fell most of three percent and remains below its 20-, 50, and 200-DMAs. Implied volatility for the NASDAQ-100 (VXN 17.03 -0.12) closed relatively flat. It is still below its 20- and 50-DMAs but above its 200-DMA.
Market internals were mixed with advancers leading decliners 4:3 on the NYSE and modestly on the NASDAQ. Up volume led down volume 3:2 on the NYSE while down volume led up volume nearly 5:4 on the NASDAQ. The index put/call ratio rose +0.14 close at 0.95. The equity put/call ratio rose +0.09 to close at 0.65.
Conclusion/Commentary
The three equity indexes that were are monitoring for leadership closed higher. The bank indexes and Russell-2000 all closed higher with all three closing above their respective 200-DMAs. While the move was not particularly strong, it keeps the bulls in the game for another trading day. The bulls have not yet been able to force the Russell-2000 to close above its 20-DMA which is critical for the bulls be begin to get some upside momentum in the small caps. To become bullish, both QQQ and IWM need to rally up to and through the downtrend line which has defined trading since March.
We hope you have enjoyed this edition of the McMillan portfolio. You may send comments to mark@stockbarometer.com.
