Market “noise” tilts back toward mixed/negative
Back to a mixed/negative market trend picture after last week’s sell-off. The market “noise” level is fairly high, however, with the number of identifiable trends remaining low.
Key downside levels I’m watching are 1430-1440 on the S&P 500 and 13,000 on the DJIA, as well as the recent November lows (about 1405 and 12,700, respectively).
New positions
Alcoa (AA) – Last Monday I sold some January 40 calls against my long position in AA (purchased 8/17/07) as the stock rallied with the rest of the market:
And, like the rest of the market, the stock mostly sold off for the rest of the week. AA’s intermediate-term trend is unclear, but a break below 34 would probably suggest a retest of the August lows around 31 or so. A move above the 37-38 resistance level would appear quite bullish.
Citigroup (C) – Last Monday I substantially reduced my cost basis in my long position in C (purchased 11/16/07) by selling some January 35 calls against it as the stock rallied with the rest of the financial sector:
The stock retreated with the rest of the market during the rest of the week and remains in an intermediate-term downtrend, but it’s also still oversold and (so far) holding above the 29-30 support level. Next lower support appears to be at the 27-28 and 25 levels.
Watchlists
“Upside strength” candidates of interest this week include Ameren (AEE), Bank of New York (BK), Ecolab (ECL), Hormel (HRL), Rohm & Haas (ROH), and Weyerhaeuser (WY).
Candidates of interest on the “oversold” scans include Baldor Electric (BEZ), Family Dollar Stores (FDO), Home Depot (HD), Hospitality Properties Trust (HPT), KB Home (KBH), KeyCorp (KEY), Office Depot (ODP), Starwood Hotels & Resorts Worldwide (HOT), Time Warner (TWX), and Wachovia Corp. (WB).
