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Light Volume Recovery...

7/14/2014 9:01:45 AM

Earnings season continues with the bulls buying modestly...

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 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: 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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The long and short of it is that equities closed fractionally higher, for the most part on Friday. The three canaries, the Russell-2000 (IWM 115.10 -0.15), the Bank Index (KBE 32.92 -0.08), and the Regional Bank Index (KRE 39.73 -0.06) were the only equity indexes, we regularly monitor, to close lower. They are also the only ones below their 20-Day Moving Averages (DMAs). All equity indexes we regularly monitor closed above their 50- and 200-DMAs and all are in trading state with a BULLISH BIAS. Longer Term Bonds (TLT 113.58 +0.72) closed higher and shifted to an uptrend state with a BULLISH BIAS. It remains above its 20-, 50-, and 200-DMAs. Trading volume continued to be light with 524M shares traded on the NYSE. Trading volume on the NASDAQ was also light with 1.498B shares traded.

There was a single economic report of interest released:

• Treasury Budget (Jun) came in at $70.5B versus an expected $75.0B

The report was released with two hours remaining in the session.

Apple (AAPL 95.22 +0.18) 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 37.71 -0.39) fell one percent. It remains below its 200-DMA. The next target above remains $40.96, it's closing price on the last trading day of 2013. It is in an trading 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 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 flat. The dollar continues to trade below its 200-DMA while the Euro failed to break up through its 200-DMA.

The yield for the 10-year treasuries fell a single basis point to close at 2.52. The price of a barrel of crude oil fell -$2.10 to close at $100.83.

The implied volatility for the S&P-500 (VIX 12.08 -0.51) fell four percent. The implied volatility for the NASDAQ-100 (VXN 13.66 -0.47) fell three percent.

Market internals were bullish to neutral. Advancers led decliners 5:4 on the NYSE and were pretty much dead even on the NASDAQ. Up volume led down volume by a narrow margin on the NYSE and by 5:4 on the NASDAQ. The index put/call ratio rose +0.21 to close at 1.27. The equity put/call ratio fell -0.13 to close at 0.54.


Conclusion/Commentary

We remain cautiously optimistic about the bulls ability to control market action during the seasonally bullish earnings season. While the canaries continue to provide a cautionary tale, other equity indexes are able to move modestly higher. We will remain long DIA and SPY and look for an opportunity to enter a trade on QQQ in the near future.

 


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

 

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