Sell-off? What sell-off?
The market’s strong performance this past week erased most or all of the losses from the previous week’s sell-off (and then some for the Russell 2000 Index) and has swung the latest trend analysis of all the major indices back to positive from the mixed picture of the previous week. Although further “turbulence” might well be expected, this – and the continued strong performance from the broad Russell 2000 Index, which is once again at a new all-time high – suggests that the current intermediate-term uptrend still remains intact.
New positions
Last week I initiated two new positions. Late on Tuesday I sold some February 20-strike puts on Bristol Myers Squibb (BMY) as it sold off prior to announcing what turned out to be better-than-expected earnings.
And at Wednesday’s opening I sold February 25-strike covered calls against my long position in Lear (LEA) after it opened sharply higher after the company announced earnings that beat analysts’ estimates. Given the stock’s longer-term weak technical picture, I was happy to have the opportunity to sell calls here (bringing my net purchase cost to below $23/share), as I wouldn’t be surprised to see it drop back down again closer to the 20 level before finding an intermediate-term bottom.
Watchlist additions/deletions
I’ve also added (or re-added) a number of stocks to my current watchlist, including Hershey (HSY), NiSource (NI), Nautilus (NLS), Royal Caribbean Cruises (RCL), Companhia Siderurgica Nacional (SID), Tyco (TYC), and Vodaphone (VOD). Many of these are getting down close to levels at which I will consider selling puts.
