Market Update

[noonereal]

2 minutes ago, HSFBfan said:

i bet the horses

i have had 2 "tips" in my life.

Both won. 

I go to casinos. 

 

[HSFBfan]

Just now, noonereal said:

i have had 2 "tips" in my life.

Both won. 

I go to casinos. 

 

I do once in a while

[DarterBlue]

3 hours ago, HSFBfan said:

From -400 today to +30 and we still have 2 hours left of trading

For the third time in just under three months, the major averages retested the February 8, 2018 lows. And, for the third time, they held. With that said, there are some very troubling signs.

• Yes, the market's rally off the support was impressive. However, it was not nearly as impressive as the February 8 rally which went from down over 500 to a solid gain at the close. This time, with the exception of the DOW, all the other broad indices closed down.
• Since the market top on January 26, 2018, the major averages have traced out triangle patterns. What does this mean? The difference between the relative prior highs and prior lows over this period as contracted. Thus, from January 26, to May 3, if you connect the relative highs over that period you have a downward sloping line. The situation is the opposite if you connect the relative lows. You have a slightly upward loping line. The problem is that the downward sloping line at the top is far steeper than the upward sloping line at the bottom. Thus, the the angle being formed at the RHS of the triangle is occurring at a relatively lower level for the averages. These types of triangle patterns generally breakdown, not breakout.
• Even with the rebound today, declining stocks swamped advancing stocks and new 52 week lows were ahead of new 52 week highs by a solid margin.
• The rallies off the lows each time since February 8, have gotten less robust. While the selloffs, while less manic, seem just as strong.

I currently have two open positions. S&P Call options with a July expiration and shares in GRUB. The GRUB shares are just shy of break even despite the earnings selloff Tuesday (earnings were strong, BTW, but expectations of many growth stocks tend to be high). On the other hand, the S&P call options are deeply in the red. I am down over 30% or well over $3,000 in them.

Even though I have reservations about the quality of the day's rally, I did not cover either position. I am still long. Why? It's funny, but had the market failed to rally when the February 8, lows were retested, I would have sold both positions in the final hour. But we did rally, albeit in suspect fashion. So I held. 

Here is what I plan to do. If this is a one day rally and the averages are weak by mid afternoon trading Friday, I will take the loss on the S&P 500 Calls. You never let a position destroy you when you are wrong. You take the loss. With respect to GRUB, I will likely be a bit more patient as it recouped about half of Tuesday's losses on Wednesday and Thursday. It is a strong stock with a good recent growth record. So I am more willing to exercise some degree of patience with it. 

[DarterBlue]

On 5/3/2018 at 5:01 PM, DarterBlue said:

I currently have two open positions. S&P Call options with a July expiration and shares in GRUB. The GRUB shares are just shy of break even despite the earnings selloff Tuesday (earnings were strong, BTW, but expectations of many growth stocks tend to be high). On the other hand, the S&P call options are deeply in the red. I am down over 30% or well over $3,000 in them.

Even though I have reservations about the quality of the day's rally, I did not cover either position. I am still long. Why? It's funny, but had the market failed to rally when the February 8, lows were retested, I would have sold both positions in the final hour. But we did rally, albeit in suspect fashion. So I held. 

Here is what I plan to do. If this is a one day rally and the averages are weak by mid afternoon trading Friday, I will take the loss on the S&P 500 Calls. You never let a position destroy you when you are wrong. You take the loss. With respect to GRUB, I will likely be a bit more patient as it recouped about half of Tuesday's losses on Wednesday and Thursday. It is a strong stock with a good recent growth record. So I am more willing to exercise some degree of patience with it. 

I go into the weekend with both positions intact. The GRUB trade is again solidly positive. The S&P Calls, have halved their losses but are still down over $1,600. Today's up move had good and bad to it. The good was the quality of the advance in terms of % gained and breadth, advancing stocks 3-1 ahead of declining stocks. The bad was the fact that the advance came on contracting volume. Lower volume is indicative of a rally that does not have a lot of conviction. Volume is the fuel that keeps a rally going. It was not good to see it dry up so soon after an initial attempt to go higher.

[DarterBlue]

The market had another positive day. However, two things were missing. The first was a lack of volume. The second was that both the DOW and S&P had difficulty reclaiming their 50 day moving averages. During the trading day, both got above this mark. However, by the close, the DOW was again below while the S&P closed right on it. Should they both get above it over the next two days, I will add to my long positions on the day after.

The two stocks I have in mind are Floor N Decor (FND) and Salesforce (CRM). Salesforce is a Cloud Computing company while Floor N Decor is a box store retailer of flooring (tiles, wood, etc.). If I buy these two stocks, I will put approximately $40,000 into each position. 

[DarterBlue]

On 5/7/2018 at 8:16 PM, DarterBlue said:

The two stocks I have in mind are Floor N Decor (FND) and Salesforce (CRM). Salesforce is a Cloud Computing company while Floor N Decor is a box store retailer of flooring (tiles, wood, etc.). If I buy these two stocks, I will put approximately $40,000 into each position. 

If the market can hold its current gains through 2:30 pm, I will be a buyer of CRM today. I will purchase 300 shares of the stock. Depending on market strength, I may also purchase 856 shares of FND. Holding current strength would mean the S&P and DOW will have retaken their respective 50 day moving averages. As of now, it seems last Thursday's bottom may hold for the intermediate term. 

[BUFORDGAWOLVES]

1 hour ago, DarterBlue said:

If the market can hold its current gains through 2:30 pm, I will be a buyer of CRM today. I will purchase 300 shares of the stock. Depending on market strength, I may also purchase 856 shares of FND. Holding current strength would mean the S&P and DOW will have retaken their respective 50 day moving averages. As of now, it seems last Thursday's bottom may hold for the intermediate term. 

like.

[DarterBlue]

2 hours ago, DarterBlue said:

If the market can hold its current gains through 2:30 pm, I will be a buyer of CRM today. I will purchase 300 shares of the stock. Depending on market strength, I may also purchase 856 shares of FND. Holding current strength would mean the S&P and DOW will have retaken their respective 50 day moving averages. As of now, it seems last Thursday's bottom may hold for the intermediate term. 

I bought 301 shares of CRM at prices ranging from 129.49 to 129.50. The buys occurred between 2:05 and 2:20 and were filled with limit orders. As I type this, the market is holding most of its gains for the day. I will make a decision on the 856 shares of FND over the next fifteen minutes. 

[DarterBlue]

I bought 848 shares of FND at 46.85. I am now as invested as I intend to be for this next market leg. I will keep the three positions: GRUB, FND and CRM provided they act well. If the market continues on an uptrend, I will use options on the S&P and perhaps the Russell when the current S&P Options are liquidated. I still think there is not a whole lot of upside in this market both with respect to time and percentages. However, at the end of the day, I will trade in the direction of the trend till it is clear that it is going to reverse. 

[BUFORDGAWOLVES]

How’d your day shake out?

[golfaddict1]

1 hour ago, BUFORDGAWOLVES said:

How’d your day shake out?

How many oldies here?   Is Darter EF Hutton?   When EF Hutton talks people listen (Old popular commercial Darter).  

Or is Darter like the old Smith Barney commercial with the actor from the PaperChase Houseman...does he “make money the old fashioned way... he EAAAAAAAAARNS it”.  He really worked that earns.   

[BUFORDGAWOLVES]

32 minutes ago, golfaddict1 said:

How many oldies here?   Is Darter EF Hutton?   When EF Hutton talks people listen (Old popular commercial Darter).  

Or is Darter like the old Smith Barney commercial with the actor from the PaperChase Houseman...does he “make money the old fashioned way... he EAAAAAAAAARNS it”.  He really worked that earns.   

Darter doing work!

Figured I’d learn a thing or two from Darter. 

😎😎😎

[DarterBlue]

2 hours ago, BUFORDGAWOLVES said:

How’d your day shake out?

Made money on the day. The new positions were slightly positive at the close (about 250). GRUB and the S&P Options were positive over $2,400. 

If the worst has past in this 15 week correction, I expect the four positions will end up doing better than the market. Longer term I am not bullish, as I expect we will have a bear market later this year. It's just due and the market is overvalued.

But for now, I will go with the flow. 

[HawgGoneIt]

I read where petroleum company stocks soared today. Exxon, BP etc. all had a great jump today. Oil barrel prices also jumped a couple of bucks per barrel as well. 

Not sure what that means. Just market news I read. 

[DarterBlue]

1 hour ago, HawgGoneIt said:

I read where petroleum company stocks soared today. Exxon, BP etc. all had a great jump today. Oil barrel prices also jumped a couple of bucks per barrel as well. 

Not sure what that means. Just market news I read. 

Iran has the fourth largest proven oil reserves within its borders and is a large exporter. With the shredding of the Iran Nuclear deal, there will be significant implications for the supply of oil. I think we have been leading up to this over the past two months. Today with the deed already done, the market followed through. 

So the Oils and other Energy stocks may lead this current rally. But for me, I have always been reluctant to buy them, both from a personal standpoint and because I have found commodity stocks in general to be very cyclical and difficult to make big money on. 

[DarterBlue]

On 5/4/2018 at 5:21 PM, DarterBlue said:

I go into the weekend with both positions intact. The GRUB trade is again solidly positive. The S&P Calls, have halved their losses but are still down over $1,600. Today's up move had good and bad to it. The good was the quality of the advance in terms of % gained and breadth, advancing stocks 3-1 ahead of declining stocks. The bad was the fact that the advance came on contracting volume. Lower volume is indicative of a rally that does not have a lot of conviction. Volume is the fuel that keeps a rally going. It was not good to see it dry up so soon after an initial attempt to go higher.

If the market strengthens into the afternoon today, I may take my profits on the S&P 500, July Calls. Does this mean I am getting bearish? No, not at all. The current move still looks like it has room to run. Why then take profits on the Option position? The simple answer is that the market is now overbought.

There are two ways an overbought market can work this off. The first is to go sideways for awhile. The second it to pull back. I don't know which it will do. But the odds favor one or the other. The options I own are a wasting asset. Yes, they are currently in the money. So if the market does not pull back too much, they will maintain some intrinsic value. However, the time value in them is now at a point where it will erode quickly since they expire July 20. As such, I don't know that I want to hold them through a pull back. If we end up just going sideways, that's fine. I don't mind holding through some time decay. That is why I will only get rid of them if we continue to strengthen today. 

If I sell them today, I will post the results after I do. 

[DarterBlue]

6 hours ago, DarterBlue said:

If the market strengthens into the afternoon today, I may take my profits on the S&P 500, July Calls. Does this mean I am getting bearish? No, not at all. The current move still looks like it has room to run. Why then take profits on the Option position? The simple answer is that the market is now overbought.

There are two ways an overbought market can work this off. The first is to go sideways for awhile. The second it to pull back. I don't know which it will do. But the odds favor one or the other. The options I own are a wasting asset. Yes, they are currently in the money. So if the market does not pull back too much, they will maintain some intrinsic value. However, the time value in them is now at a point where it will erode quickly since they expire July 20. As such, I don't know that I want to hold them through a pull back. If we end up just going sideways, that's fine. I don't mind holding through some time decay. That is why I will only get rid of them if we continue to strengthen today. 

If I sell them today, I will post the results after I do. 

The market began to weaken shortly after I posted the above. So I did not close the options positions. The day's action was interesting in the sense that after chugging higher early, demand for stocks seemed to dry up after 11:30 am. However, despite this, we did not have a violent selloff such as we were having in the February through April period. Rather the pull back was very orderly. Volume did pick up a bit on the weakness. But the pickup was not substantial. As of now, I am optimistic that any weakness this week will be mild and will serve to correct the overbought situation. On the day I went from being up just under $2,000 to losing over $1,300. 

[dan in daytona]

Darter, the new "Cardiac Kid." 😂

[DarterBlue]

Stocks closed moderately higher today. However, beneath the surface, there was reason to be bullish as the Russell 2000, a  gauge for smaller, secondary stocks hit an all time high and was the best performing broad based index.

To me this is further evidence that despite its age and the market's overvaluation, this bull has further to run. 

[paladin4ever]

On 4/27/2018 at 10:56 AM, golfaddict1 said:

Put it all on Pie-O-Mine   (Sopranos).  

[DarterBlue]

56 minutes ago, paladin4ever said:

I don't bet. I speculate. There is a big difference!

As I said, the market has made up its mind to work its way higher. Age, too much investor optimism and overvaluation will probably check the duration of the move higher. But for now, all systems seem go to me. 

[DarterBlue]

As I type this, the futures are looking very strong overnight. Should this hold up early into the trading day tomorrow, I will take my profits on the S&P 500 July Options. I do believe the market will continue to go higher in the near to intermediate term, though. So I will seek to deploy the cash from the sale into the Russell 2000 Options. I will probably chose an August or September expiration date for those. 

I will also keep the individual stock positions intact. 

[HSFBfan]

7 minutes ago, DarterBlue said:

As I type this, the futures are looking very strong overnight. Should this hold up early into the trading day tomorrow, I will take my profits on the S&P 500 July Options. I do believe the market will continue to go higher in the near to intermediate term, though. So I will seek to deploy the cash from the sale into the Russell 2000 Options. I will probably chose an August or September expiration date for those. 

I will also keep the individual stock positions intact. 

30k in sight? 

[DarterBlue]

21 minutes ago, HSFBfan said:

30k in sight? 

On the DOW? Way too early. Let's get past the old highs first. There is still a lot of resistance to that level before you start thinking about 30,000.

[HSFBfan]

Just now, GardenStateBaller said:

DOW was up almost 300 today finishing at over 25,000. So many things to be thankful for these days. 

1000 points off the high. If we can get back to 26k it might be able to take off.