Near-term sell-off ahead?
Friday’s sell-off in the market has me a bit concerned, and I suspect it may not bode well for the market over the short term. Of course my main focus remains on the intermediate and longer term, and on that note the trend picture for the major indices is still positive overall – but weaker than that of the previous week.
A lot of interesting put-selling candidates are once again showing up on my scans (see the watchlist section below), and I plan to continue to be fairly aggressive about placing limit orders to establish potential new positions. At the same time, however, I want to be careful to “leave some powder dry” so that I’m able to take advantage of even lower prices should the current weakness develop into any sort of significant decline.
New positions
On Friday I sold some April 25-strike puts on Newell Rubbermaid (NWL) into weakness as the stock fell with the market. NWL has been showing strength over the last few months, perhaps reflecting the beginnings of a turnaround in the company’s fortunes. If the stock declines to the 22 – 23 level, I’ll probably look to sell some 22-1/2 puts as well.
Watchlist
Stocks of interest that showed up on this week’s “upside strength” scans include 3M (MMM), Alcoa (AA), BHP Billiton (BHP), Colgate (CL), Companhia Siderurgica Nacional (SID), Conoco Phillips (COP), A.G. Edwards (AGE), General Mills (GIS), Sonic Automotive (SAH), and Washington Mutual (WM). “Beaten down” stocks of interest continue to include some usual suspects – like Ford (F), Frontline (FRO), Gannett (GCI), General Motors (GM), and Intel (INTC) – as well as Allstate (ALL), Dow Chemical (DOW), Hershey (HSY), J.M. Smucker (SJM), and Safeco (SAFC).
