6/11/2014 8:57:44 AM
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Stock Market Trends:
- 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.
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 relatively flat open that was not all the different at the close. The major indexes all managed a positive close, but it was relatively flat for the Dow and S&P-500. meandered higher until noon then descended for two hours to move into negative territory before rising again in the final two hours to close with modest gains. In fact, all equity indexes we monitor were able to close with gains, although the Dow Jones Transports (IYT 147.19 -0.25) and the Semiconductor Index (SOX 620.25 +1.82) moved in opposite directions. The three canaries, the Russell-2000 (IWM 116.67 -0.23), the Bank Index (KBE 33.56 -0.09), and the Regional Bank Index (KRE 40.56 -0.17) all posted relatively modest losses. Both Bank Indexes shifted to a BULLISH BIAS. All equity indexes we regularly monitor are above their 20-, 50-, and 200-Day Moving Averages (DMAs) and are in uptrend states. Longer Term Bonds (TLT 111.02 -0.41) slipped below its 50-DMA but remains above its 200_DMA. It maintains a tradings state but has indicated a possible change to a BEARISH BIAS. Trading volume decreased and remained light with 557M shares traded on the NYSE. Trading volume on the NASDAQ was virtually unchanged with a light 1.771B shares traded.
There were two economic reports of interest released:
- Wholesale Inventories (Apr) rose +1.1% versus an expected +0.3% rise
- JOLTS Job Openings (Apr) came in at 4.455M versus March's 4.166M
Both reports were released a half hour into the session.
We are watching gold for a potential reversal in the Gold Miners Index (GDX 23.03 +0.48) rose two percent as the price of Gold (GLD 121.39 +0.74) posted a fractional gain. Both closed below their 20-, 50-, and 200-DMAs.
Apple (AAPL 94.25 +0.55) posted a fractional gain. AAPL constitutes about 20 percent of the NASDAQ-100 and nearly five percent of the S&P-500.
Seadrill Limited (SDRL 39.25 -0.30) posted a fractional loss. 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 rose two tenths of one percent to close even with its 200-DMA. The Euro fell a like amount and broke below its 200-DMA weeks ago. Are we seeing a change in long term trend here?
The yield for the 10-year treasuries rose three basis points to close at 2.64. The price of a barrel of crude oil fell -0.06 to close at $104.35.
The implied volatility for the S&P-500 (VIX 10.99 -0.16) fell one percent and is hovering near multi-year lows. The implied volatility for the NASDAQ-100 (VXN 13.57 -0.22) fell most of two percent and remains well below its 200-DMA.
Market internals were mixed with decliners leading advancers 4:3 on the NYSE and by 5:4 on the NASDAQ. Up volume paced was the same as down volume on the NYSE and up volume eclipsed down volume 5:4 on the NASDAQ. The index put/call ratio fell -0.19 to close at 0.78. The equity put/call ratio rose +0.04 to close at 0.52.
While the major indexes closed flat to modestly higher, the canaries all sold off modestly and other equity indexes closed either side of flat. Volume lightened a bit but this certainly looks like a pause in the rise for equities or perhaps the beginning of at least a small move lower. With all equity indexes we regularly track in uptrend states with a BULLISH BIAS, there is a lot of momentum still favoring the bulls. We will bide our time for at least on day to see what kind of effort the bears will put forth.
We hope you have enjoyed this edition of the McMillan portfolio. You may send comments to firstname.lastname@example.org.