Still looking higher
Last week the market held up well, leaving the overall trend picture for the major indices virtually unchanged from a week ago, displaying a positive “green” across almost the entire spectrum of trend periods for each index. This suggests that while there’s certainly room for further consolidation of the latest rally, the uptrend likely has further to go.
I took advantage of last week’s ups and downs to initiate a couple of new short positions – this time on some February options. I sold some 62 1/2 calls against my shares of Exxon (XOM), and some (more) 17 1/2 puts on General Motors (GM).
The latter’s recent strength as it rallied off of the 18 support level and its high option premiums were enough to entice me in once again. In the case of XOM, I chose the 62 1/2 calls rather than the 60′s to give it some room on the upside – its recent strength suggests that it could revisit the 63-65 level over the near term.
As far as this coming options expiration week, I’ll be going into it short January puts on Frontline (FRO), GM, Lear (LEA), and Tribune Co. (TRB). Right now, the LEA puts are the only ones trading in the money, so I’m anticipating being put at least that stock – a position I’m comfortable with at these levels (with long-term support at about 20-22).
I’m also adding several new stocks to my watchlist. They are Dollar General (DG), Pilgrim’s Pride (PPC), Sanderson Farms (SAFM), and Sysco Corp. (SYY).
