Market rally: On schedule, but where’s it going?
Last week’s market rally from significantly “oversold” levels was not unexpected, and is reflected in a now mixed weekly trend analysis picture. While the NASDAQ and Russell 2000 are still negative or neutral overall across their entire trend spectrums, the S&P 500 and the DJIA are back to positive on the short and longer term, and neutral or negative for the intermediate term.
The bottom line is that it seems likely that the current rally has further to go, and it wouldn’t surprise me to see the DJIA get back to its recent highs and the S&P 500 back above 1300. However, I’ll remain skeptical about its sustainability – and view it more as a selling opportunity – until or unless market action dictates otherwise.
On another note, I’ve added a variety of ETFs – including Select Sector SPDRs as well as several iShares world market ETFs – to the main trend analysis page at http://rpell.com. I’ll be adding several more shortly.
New positions
J.P. Morgan (JPM) – This is actually a closing of a position: early last week I bought back the June 45 calls I’d sold three weeks ago against my long position in JPM. They’d lost 90% of their value at that point, and the likelihood of a rally – which would offer another opportunity to sell calls again at higher prices – had increased.
The net return on this “trade” was about 4% on my JPM shares.
Fresh Del Monte (FDP) – Late last week I sold some June 17.5 calls against my long position in this stock as it rallied to over 18.
I might be jumping the gun here, but I’d have been more patient with the position if the company hadn’t slashed its dividend shortly before I was put the stock during the last options expiration.
Watchlist
Some new and some familiar names on this week’s “upside strength” candidates include Alberto Culver (ACV), Clear Channel Communications (CCU), Coca Cola (KO), Kraft (KFT), General Mills (GIS), Paccar (PCAR), and Wal Mart (WMT).
“Oversold stocks” of interest include Analog Devices (ADI), Deutsche Telekom (DT), Dollar General (DG), Gannett (GCI), Intel (INTC), KB Home (KBH), Kinder Morgan Energy Partners (KMP), and MDC Holdings (MDC).
