S&P 500: Another 10-30 points to go?
The ability of most major stock markets and indices to continue to move higher speaks for itself: the trend remains up. This is further confirmed by the almost all positive weekly trend picture, with only the Japan Index ETF currently negative.
The S&P 500 appears to have pushed above the 1510-1520 resistance level and is now approaching its all-time highs – about 1530 on a closing basis and 1550 intraday – which now serve as key near-term upside resistance. The Nasdaq is once again under performing (but still positive), and its near-term upside resistance remains at about 2590-2610.
Key near-term support levels are now about 1500 for the S&P 500, 2510 for the Nasdaq, 860 and 870 for the Russell 3000, and about 13,250 for the DJIA.
Options Expiration Results
- ACE Limited (ACE) – The May 60-strike calls I sold on 4/24/07 against my long position in ACE (purchased 1/22/07) expired ITM and my shares were called for a 4-month net return of about 3.6% in the position, not including a dividend payment.
- Alcoa (AA) – The May 37.5-strike calls I sold on 5/7/07 against my long position in AA (purchased 3/19/07) expired in the money (ITM) and my shares were called for an overall 2-month net return of about 12% in the position (not including an expected upcoming dividend payment).
- Amgen (AMGN) – The May 62.5-strike calls I sold on 4/19/07 against my long position in AMGN (purchased 3/15/07) expired out of the money (OTM) for a 4-week net return of about 4.2%.
- International Paper (IP) – The May 37.5-strike calls I sold on 4/26/07 against my long position in IP (purchased 3/19/07) expired in the money (ITM) and my shares were called for an overall 2-month net return of about 5.7% in the position.
- MSC Industrial Direct Co. (MSM) – The May 50-strike puts I sold against MSM on 4/27/07 expired ITM and I was put the stock for a net cost basis of about $48.60 per share.
- New York Community Bancorp (NYB) – The May 17-1/2-strike puts I sold against NYB on 4/26/07 expired ITM and I was put the stock for a net cost basis of about $17.17 per share.
- Oshkosh Truck (OSK) – The May 55-strike calls I sold on 4/17/07 against my long position in OSK (purchased 3/19/07) expired ITM and my shares were called for an overall 2-month net return of about 4.2% in the position.
- Whole Foods Market (WFMI) – The May 45-strike calls I sold on 4/20/07 against my long position in WFMI (purchased 1/22/07) expired OTM for a 4-week net return of about 5.3%.
New positions
No new positions this week, although not because I have any plans to “sell in May and go away.” Instead, the market’s extended levels and so far limited retracements – and a more hectic than normal schedule on my part – have temporarily reduced my activity.
Watchlists
New stocks of interest in this week’s “upside strength” scans include Applied Materials (AMAT), Cubic (CUB), CBS Corp. (CBS), Cypress Semiconductor (CY), Dillard’s (DDS), Eastman Chemical (EMN), El Paso (EP), GrafTech International (GTI), MGIC Investment (MTG), SK Telecom (SKM), Sara Lee (SLE), UGI Corp. (UGI), Vishay Intertechnology (VSH), and Verizon (VZ).
New stocks of interest in this week’s “oversold” scans include Federated Department Stores (FD) and Newmont Mining (NEM).
Dear Sir,
A little out of step with your recent posts but trying to catchup. Congradulations on your returns for this most recent expiration, very impressive.. (gives me hope..)
Also, I would like to make comment on ‘your comment’ to one of my questions from a few weeks ago regarding the market levels and direction. Your reply was that “it appears the path of least resistents seems up!.
You comment or statement, rather simplistic but very observant, has realy had me thinking!. I have been waiting for the ‘big pull back” to get in, but it keeps going up and up…. momentiium surely is behind it.. My point is that your observation was/is “on the mark”, and one I think I have missed.. by not watching the big picture, and tyring to “force” the direction..
However, as you have commented in this recent post, thinks do seem extended, and for me, very uncomfortable levels without some kind of breather. Still looking to “step back in” the market but it seems scary at these levels…
Looking forward to reading past few weeks of posts. Many questions still to ask..
Now if could only shake the day job long enough to move forward and match your impressive results.
Thank you for sharing your posts.
Regards, F.S.
Hi,
Yes, I think keeping the “big picture” in mind is key here (at least for me). By focusing only on stocks I wouldn’t mind owning for the longer term as an investor, and by following the risk management techniques I’ve mentioned previously, I don’t worry about the market’s short-term ups and downs, or even too much about its overall state at any given time.
By spreading my bets out over time (that is, I don’t go “all in” to the market at any one time or market level) I don’t worry about being caught fully invested at a significant market top. In fact, quite the opposite – since I’m usually selling puts into downtrends and calls (on stocks I own) into uptrends, I’ll tend to be more fully invested at lower market levels and less at higher levels.
I wish you the best of luck in moving forward with your investing/trading approach. This particular strategy does require more time and effort than a “buy and hold” approach, but it can all be done after (or before) the usual market hours (and any day job).
For example, I usually scan for stocks on a nightly basis and place option limit orders daily (each evening or morning before the market opens), and then do further research and preparation on the weekends. However, I’m sure a weekend-only approach to this strategy would probably work fine too.
Thanks again for your comments.
Dear Sir,
Thank you for your comments and confirmation on working this strategy on Off-Hours.
A little personnel time/live style adjustments and I’ll be ready shortly to start. I intend to follow your style of the combined evenings and weekends. I think I can make that work along with some intraday checking.
Thank you for your continued posts and patients with my questions.
Regards F.S.