6/20/2014 9:13:19 AM
Bears start flexing their muscles...
Recommendation: Take no action.
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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: June 10, 2014 $1.00, 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 = $6.28 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.) We have collected dividends: June 10, 2014 $1.00.
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Equities traded in a narrow range and were little changed after a modestly higher open. The major indexes posted modest losses while other equity indexes were mixed with the bank indexes hardest hit down fractionally. All equity indexes are trading above their 20-, 50-, and 200-Day Moving Averages (DMAs) and all have a BULLISH BIAS in uptrend states. Longer Term Bonds (TLT 110.96 -1.44) lost more than one percent to close below its 20- and 50-DMAs but above its 200-DMA. It has a NEUTRAL BIAS and maintains a trading state. Trading volume increased but remained light with 625M shares traded on the NYSE. Trading volume on the NASDAQ increased to nearly average with 1.830B shares traded.
There were four economic reports of interest released:
- Initial Jobless Claims for last week came in at 312K versus an expected 313K
- Continuing Jobless Claims came in at 2.561M versus an expected 2.638M
- Phildelphia fed (Jun) came in 17.8 versus an expected 13.4
- Leading Indicators (May) rose +0.5% as expected
The first two reports were released an hour before the open. The other two came out a half hour into the session.
Apple (AAPL 91.86 -0.32) closed fractionally lower. AAPL constitutes about 20 percent of the NASDAQ-100 and nearly five percent of the S&P-500.
Seadrill Limited (SDRL 39.56 -0.11) posted a fractional loss closing below its 200-DMA. It has surpassed its recent high with the next target being $40.96, it's closing price on the last trading day of 2013. It is in an uptrend state. We sold March 2014 $35.00 put contracts for $150 at the open on Feb 18th,2014 and bought shares at $35.43. The stock is now trading ex-dividend for $0.98 and one dollar for total dividends issued of $1.98. The stock fell back to just below its 200-DMA. 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 fell less than two tenths of one percent while the Euro rose a like amount. The dollar continues to hover below its 200-DMA. The Euro is plumbing the depths at its recent lows. It closed well below its 200-DMA.
The yield for the 10-year treasuries rose a basis point to close at 2.62. The price of a barrel of crude oil closed up forty-six cents at $106.43.
The implied volatility for the S&P-500 (VIX 10.62 +0.01) closed flat and is at its lowest level seen since 2006. The implied volatility for the NASDAQ-100 (VXN 12.51 -0.14) closed down one percent to the lowest levels seen since March 2013 which was the lowest levels seen since before the financial crisis. What does it mean? It means that there is a remarkable amount of complacency out there.
Market internals were mixed. Advancers led decliners 4:3 on the NYSE while decliners led advancers 5:4 on the NASDAQ. Up volume led down volume 5:4 on the NYSE while volume was evenly matched on the NASDAQ. The index put/call ratio was flat (down -0.01) to close at 0.89. The equity put/call ratio fell -0.02 to close at 0.47.
We are at a dangerous place where we could see the beginning of a slide lower or a weak move to the upside. We will maintain our long positions but will be ready to exit them soon.
We hope you have enjoyed this edition of the McMillan portfolio. You may send comments to email@example.com.