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Bulls Continue to Buy...

6/9/2014 9:02:34 AM

Shorts continue to cover...

Recommendation: Take no action.

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Stock Market Trends:

Stock Market Trends Table

- ETF Positions indicated as Green are Long ETF positions and those indicated as Red are short positions.

- The State of the stock market is used to determine how you should trade. A trending market can ignore support and resistance levels and maintain its direction longer than most traders think it will.

- The BIAS is used to determine how aggressive or defensive you should be with an ETF position. If the BIAS is Bullish but the stock market is in a Trading state, you might enter a short trade to take advantage of a reversal off of resistance. The BIAS tells you to exit that ETF trade on "weaker" signals than you might otherwise trade on as the stock market is predisposed to move in the direction of BIAS.

- At Risk is generally neutral represented by "-". When it is "Bullish" or "Bearish" it warns of a potential change in the BIAS.

- The Moving Averages are noted as they are important signposts used by the Chartists community in determining the relative health of the markets.


Best ETFs to buy now (current positions):

Long DIA at $161.48 as of December 19, 2013
Long QQQ at $85.99 as of December 19, 2013
Long SPY at $181.19 as of December 19, 2013

Click here to learn more about my services and for our ETF Trend Trading.


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 saw a gap up open followed by follow on buying. All equity indexes we regularly monitor are above their 20-, 50-, and 200-Day Moving Averages (DMAs). All but the Bank Index (KBE 33.17 +0.31) and the Regional Bank Index (KRE 40.11 +0.41) have a BULLISH BIAS and both of those have warned of a potential shift from their current BEARISH BIAS. Longer Term Bonds (TLT 111.59 +0.00) closed unchanged and remains below its 20-DMA but above its 50- and 200-DMAs. It maintains a tradings state but has indicated a possible change to a BEARISH BIAS. Trading volume increased but remained light with 639M shares traded on the NYSE. Trading volume on the NASDAQ decreased to light with 1.602B shares traded.

There were six economic reports of interest released:

  • Non-farm Payrolls (May) came in at 217K versus an expected 220K
  • Non-farm Private Payrolls (May) came in at 216K versus an expected 230K
  • Unemployment Rate (May) came in at 6.3% versus an expected 6.4%
  • Hourly Earnings (May) rose +0.2% as expected
  • Average Workweek (May) came in at 34.5 hours as expected
  • Consumer Credit (Apr) came in at $26.8B versus an expected $15.0B

The first five reports were released an hour before the open. The last report came out with an hour remaining in the session.

We are watching gold for a potential reversal in the Gold Miners Index (GDX 22.64 -0.01) closed flat as did the price of Gold (GLD 120.61 -0.05). Both closed below their 20-, 50-, and 200-DMAs.

Apple (AAPL 645.57 -1.78) posted a fractional loss before Monday's upcoming 7:1 stock split. AAPL constitutes about 20 percent of the NASDAQ-100 and nearly five percent of the S&P-500.

Seadrill Limited (SDRL 39.38 +0.39) rose one percent. It is in an uptrend 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 was essentially unchanged while the Euro fell a tenth of one percent.

The yield for the 10-year treasuries rose two basis points to close at 2.60. The price of a barrel of crude oil closed up eighteen cents at $102.66.

The implied volatility for the S&P-500 (VIX 10.73 -0.95) plummeted eight percent closing at the lowest level in years. The implied volatility for the NASDAQ-100 (VXN 13.21 -0.45) fell more than three percent and hovers near its low of the year.

Market internals were bullish with advancers leading decliners 3:1 on the NYSE and by 5:2 on the NASDAQ. Up volume led down nearly 7:3 on both the NYSE and the NASDAQ. The index put/call ratio rose +0.31 to close at 1.04. The equity put/call ratio fell -0.03 to close at 0.47. The ratio of new highs to new lows on the NYSE surged to nearly 45:1 which is certainly an extreme.


Conclusion/Commentary

The bulls followed through on Friday as the shorts continued to cover their bests on the canaries (the Russell-2000, the Bank Index, and the Regional Bank Index). All three outperformed the broader market attaining highs not see since early April but no where near their March highs. All equity indexes wqe regularly monitor are now above their respective 20-, 50-, and 200-DMAs. We will maintain our long positions until we see clear signs of the next reversal.

 


We hope you have enjoyed this edition of the McMillan portfolio. You may send comments to mark@stockbarometer.com.

 

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