My Stock and Option Intraday comments for the first day of October have to start with how my market timing technical indicators were wrong about missing the bounce today. So perhaps my friends who went long on the market and dropped their protection figured out something I missed. So my apologies dear readers for the weekend market direction outlook. I will update the market direction outlook later today after the market closes to see what impact today’s rally is having.
Stock and Option – IWM and the Trading For Pennies Strategy
I am into my 7th trade on IWM using the Trading For Pennies Strategy. I have taken 1 loss and so far 6 gains. Results are good and Fullyinformed Members can log in and read the trade alert updates. If you want to join please use this link which explains what the Members Section is all about. I will update all the IWM trades this evening and do a complete analysis. It will be long (sorry) as I have a lot of charts from today’s trades to discuss and to explain the changes I have made. Next step will be to make sure the trades are primarily winners and then apply it to other ETFs and possible try a few liquid stocks.
Stock and Option – Microsoft Stock Downgrade
I wish analysts would leave my stocks alone. Ha ha. Today another downgrade on Microsoft Stock which is pressuring the stock. I feel pretty comfortable with my naked puts but a little more pressure could push the stock to $29 which would bring put premiums way up for the out of the money $28 and $27.
Looking at the Microsoft Stock chart, the stock is extremely oversold in every way. But as was seen on Intel Stock, an oversold stock is never a guarantee of it bouncing. Later tonight I will look at Microsoft Stock using the Ultimate Oscillator and Relative Strength Index strategy discussed in the members section to see if this stock is about ready for quick trade.
Meanwhile my overall goal will be to sell Microsoft Stock puts on further weakness.
Whoa - Extremely oversold but there is more room to fall.
Stock and Option – Scotiabank Stock
Scotiabank Stock symbol is BNS. I realize that a lot of investors don’t know this Canadian bank and actually that suits me fine. BNS Stock (trades on Toronto and New York) has been a favorite of mine for over 15 years. Recently the stock did a new issue at $52.00 to pay for some acquisitions. This bank continues to be the leading Canadian Bank with outside North America exposure. On Friday BNS Stock issued a dividend of .57 cents and the stock ran up big on Friday. Meanwhile I sold puts when the new issue came to market at the October $52 strike. I am expecting those will expire in three weeks however don’t be surprised to see this big band fall back below $53 making Put Selling the $52 and the $50 attractive. Keep this one on your radar. I have been earning 10% a year with this bank as it stays within a definable trading range making both Put Selling and covered calls attractive. I will put up a strategy paper on this strategy shortly.
Stock and Option – MFC Stock (Manulife Stock)
I just want to mention this stock. I have been trading in and out of Manulife stock much of the past year. I trade it on Toronto but it trades both on Toronto and New York. I have been using the Ultimate Oscillator and momentum to time buying the stock and selling it. Options are too thinly traded but I felt it was worth mentioning as this morning the stock got back above 12.00 and honestly this is a great company that has fallen on hard times. It is making money and expanding but the accounting method used in Canada means that insurers must keep a portion of their capital aside to cover possible claims. That amount is much larger in Canada than in the US and so it has made earnings look bad. Their loss has been my gain as this stock has been terrific for buying on weakness and selling into strength. I will explain more later, but this is worth a look.
Stock and Option – KRAFT Stock
KFT Stock continues to perform well. A couple of weeks ago it moved lower and I sold my some naked puts but since then it has pulled itself back up. Today it is up big with a gain of 2%. Obviously investors like the upcoming split of the company into two entities. I have my doubts only because I have seen so many great companies split and then the stock perform poorly, but perhaps Kraft will break that trend.
Stock and Option – INTEL Stock
Great to end the Intraday comments with a look at Intel Stock. Trading above the core support at $22.50, perhaps for the next while the stock has bottomed. I am not sure though as despite the buying the stock is only holding about 1.5% above core support. Investors who do not want to own stock but like to put sell may still want to wait. I would like to see some higher highs in this stock if I didn’t want shares.
Stock and Option – Intraday Wrap-up Comments
Just to conclude, the markets opened up on optimism that things were improving in Europe. Nonetheless the PMI figures out of Europe were all below 50 except for Ireland (of all places) which was at 51.8, a nice improvement over August when PMI was 50.9. So optimism aside the Eurozone as a group was down to 46.1 versus August’s 46.0. I don’t see any reason for optimism yet.
China’s PMI showed some improvement with a September reading of 51.8 versus August’s 50.9. But again for China these are slow growth numbers and it is also hard to know has transparent any numbers are coming out of China.
On The S&P analysts now expect earnings for the upcoming quarter to be down 4% from last year. Overall though they expect 2012 will see earnings lower by 1.8% from last year. Remembering how I indicated the S&P 500 needed about 15% earnings growth to sustain a move to new highs, I wonder where the market direction is going to end up. More on that in another article looking at how to spot a bear market in the early stages.
As I am concluding this post, the IWM ETF has turned negative and the Dow, NASDAQ and S&P are off their highs. Perhaps my market direction call showing the market remains under pressure is not all that wrong after all. Enjoy your afternoon.