The market direction outlook I discussed last night was for the markets to keep pushing higher and that’s what we are seeing today. Intraday the DOW is up 130 points at the time of my writing this, the S&P up 12 and the NASDAQ up 29. Investors have obviously baked in that the Fed will not be ending Quantitative Easing any time soon. So with that worry seemingly out-of-the-way the market direction is humming along as it pushes higher and leaves behind all those bears who thought, “finally this rally will end.” You have to feel sorry for those who are short this market as they just cannot seem to get the break (literally) that they need.
It will be a shame if tomorrow the Fed does indeed indicate a scaling back of Quantitative Easing will begin earlier rather than later. My personal guess is the Fed will want some more months behind the recent stats before announcing a scaling back of their support. That would place any kind of scaling back into early fall at the earliest in my opinion.
Market Direction Action
The market direction today has been all uphill. You can see in the 1 minute S&P 500 chart below that familiar pattern of higher highs. The only serious stalling was around 11:00 AM and then it was for only about half an hour. When the bottom held investors jumped back in and kept buying.
S&P 500 June 18 2013 intraday 1 minute chart
Market Direction Nearing The Top
The past few days keeps pushing the S&P market direction higher and with today at $1652.02 intraday, we are within striking distance of the all time high set back on May 22 at $1687.18. This has to be troubling all the shorts now and indeed it would appear that the market direction will try to push back to the May 22 high.
Market Direction Nearing All Time Highs
Market Direction and Putting My Cash Back To Work
So is it time to put all my capital back to work? That’s the nice thing about using Put Selling as a principal investment method. My capital is always working. With the market direction continuing to hang on and my outlook from last week was “What Me Worry?” I have put more capital to work but instead of spreading it here and there I have increased the amount of capital in use on those stocks that I think are in a decent uptrend and have the least chance of falling enough to place me into assignment or rolling down situations.
Market Direction Put Selling Stocks On The Radar
A few of the stocks I am using include:
Intel Stock (INTC)
I did some trades yesterday and I do believe this stock will hold into July above the $24 value. Certainly enough to allow me to get out of my naked puts at $24 with little worry of assignment. I will of course be buying them back early if I can do it for 5 cents or so. I do believe Intel Stock is on the mend and recovering from last year’s dramatic collapse. For FullyInformed Members who want more convincing before risking their capital, you can read this article.
Intel Stock is on the mend
Microsoft Stock – MSFT – Tech Giant Extraordinaire
Microsoft Stock keeps flirting with new highs and I have been busy Put Selling the dips in the stock over the last several months. Microsoft stock is back above $35 and pushing toward $36. I don’t care if the stock makes it to $36 but I do think the $34 and $33 puts are going to end up out of the money and those are the naked puts I have targeted. I sell just 5 at $34 and then 10 to 15 at $33 on each dip.
Microsoft Stock Dip Put Selling
McDonalds Stock – MCD – Fast Food and Fast Profits
I recently wrote a lengthy article discussing McDonald’s Stock. I know a lot of people are into other fast food empires and I too and Put Selling against YUM Stock although above $70 it is getting a bit overvalued to me. McDonalds Stock on the other hand is just doing fine. My article said it all as it was entitled Why You Should Consider McDonalds Stock Now For Put Selling. Still though I am getting a lot of emails from investors asking me what I think. I think selling puts on MCD Stock makes a lot of sense.
DuPont Stock – DD – The Giant That Keeps On Giving
Another stock I have written a lot about lately and did a Put Selling trade on June 14 (read the trade alert here) is DuPont Stock. This is a giant company that just keeps on paying me to sell more puts. The tight trading range it is in means Put Selling the slight dips is highly profitable and conservative as I can get to protect my capital in use.
VISA Stock – V – Charge It Please
Visa Stock is in a serious up-trend. In 2009 this stock could have been bought for under $45.00. What a steal it was. Yet so many investors thought the world was ending and seemed to forget that millions of people use their VISA cards every single day, in good and bad times for everything from booze to food which are principal products that are bought during recessions. I announced in December 2012 that I would be changing my Put Selling to in the money and out of the money and increasing the quantities of puts sold. This serious up-trend is excellent for Put Selling and has been building my portfolio for me.
Visa Stock is Up Big over the past 5 years
Intraday Market Direction Outlook Summary June 18 2013
This is why I sell puts against large cap stocks. The recent correction may or may not be over and the market direction may move back to up and up some more, but through it all I have continued to sell puts and earn substantial income and profits. I think there remains great companies that are set well for Put Selling despite what the market is trying to decide to do. The 5 companies I mentioned above are just a handful in a sea of great stocks. Look for stocks that are holding up well and in uptrends. These are the stocks to consider for Put Selling while waiting for the market direction to clearly make up its mind. Take smaller positions and sell fewer contracts at the money and more out of the money to protect against downside action.
The Fed comments tomorrow may end speculation for the next little while, but whatever happens tomorrow I know I will continue to profit. For FullyInformed Members I try to put up posts that detail out Trade Ideas covering a variety of stocks. Today I am finishing up another post that looks at many stocks that are, in my opinion, worth considering for Put Selling or covered calls.
Yesterday’s drop and recovery on just a single article out of the Financial Times should tell investors that they need clear goals, solid strategies and strong stocks to profit in today’s volatile markets and they need to remain consistent to those goals, to protect their hard-earned capital.
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