Yesterday’s market direction was disappointing for the bulls. Syria continued to dominate the news and kept investors on edge. Today though the same investors are back buying with the belief that any strike against Syria will be isolated and no troops will be sent in. This has buoyed investors confidence in stocks. At the same time though it is a rare event when the Dow is down for 4 weeks straight. Despite this being September, investors are back pushing the indexes higher and snapping up some stocks that they should be able to get some decent gains out of.
Coca Cola Stock
One of those stocks is Coca Cola Stock which has been in my portfolio for decades and which a lot of investors were getting concerned about lately as it has been on a slide from $40 all the way to $37.80 yesterday. But the stock is doing its best to hold support at $38 which I am still holding puts against. You can review my Coca Cola Stock trades here.
Coca Cola Stock is not alone today in jumping back. McDonalds Stock is back up $95, Exxon Stock is above $87.50, Johnson and Johnson Stock is above $87 and there are many others. Over the past 4 weeks many of the big caps have been beaten down so a jump back was in the works for a few days. How long this will last for many of these stocks is tough to call but I do think there will be more than a couple of days of gains here.
Market Direction Up for the S&P 500
The S&P 500 is now back above 1650. A close above 1650, which I think will happen, is bullish for stocks. While no one can gauge how long this latest bounce back might last, I do believe it will not be a one day wonder which is why I made changes to the market direction portfolio today for Fullyinformed Members. The 1650 level in the S&P 500 has a lot of support for the market direction move higher. It took several days to break through on the downside and a move back above is a signal that the next step will be higher for the S&P 500. Whether it can break through the 1680 level which is serious resistance, is another matter, but for now it’s great to see the market direction pushing back up and my naked puts quickly dropping premium. I may be able to close some of them before September 21.
Market Direction and The Fed Again
The market at this point seems ready to accept that the Fed will start scaling back its Quantitative Easing programs by mid-September. Yesterday’s factory output numbers surprised many investors and analysts and showed that the economy is continuing to expand.
Oil and Gold
Both oil and gold eased today despite the concern about a strike against Syria by the United States. By mid-afternoon gold was down almost $25 to $1387.00.
Barrick Gold Stock (ABX)
The decline in gold is pressuring the gold miners like ABX Stock again. I have been in ABX stock for quite some time. The drop from $30 to $20 and then to $14 surprised many investors, myself included. I spent a lot of time rolling down back in April and May. Since then though the range, I think is $23 to the upside and $15 to the down. These both are my favorite strikes at present for Put Selling and naked calls. My ABX Stock trades can be reviewed here by members. I am still holding puts that I will be closing shortly.
Wednesday Economic Numbers
Today numbers shows that the service sector in China hit its highest level in 5 months. The Euro Zone businesses recorded their best month in 2 years in August. A survey of the erozone PMI shows the likelihood of growth 0.2 percent in the present quarter. Add to all this the latest auto sales figures and you have enough to spark a rally.
So just as in prior weeks when a slew of bad news caught the attention of investors, today’s news was positive and have investors back buying those stocks that have been out of favor for the past 4 weeks.
Summary of Market Direction Intraday Comments For Sep 4 2013
The last 4 weeks has done a lot of damage to the market direction up but that does not mean rallies will not occur. The market direction can only stay heavily oversold for so long before a bounce had to be expected. With that bounce now underway, it is a matter of how long it will last. I plan to profit throughout it, even if it is fairly finite in the end.
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