Techs following the market higher
The market’s strong performance last week and a solidly green trend picture for just about every major index and sector (except energy) leave no doubt as to the direction of the current intermediate-term trend. The S&P 500 is closing in on its all-time highs, and even the still-lagging technology sector is back in sync, with the Nasdaq now appearing to be on the verge of surpassing the multi-year highs it made last month.
Upside resistance levels I’m watching are now about 1470-80 and 1510-1520 for the S&P 500, and 2550 and 2600 for the Nasdaq. Key near-term downside support levels are about 795 for the Russell 2000; 1430 for the S&P 500; 12,600 for the DJIA; and 2450 for the Nasdaq.
Options Expiration Results
- Allstate (ALL) – The February 60-strike puts I sold on 1/31/07 expired out of the money (OTM) for a 2-1/2-week net return of about 0.8%.
- Applied Materials (AMAT) – The February 18-strike puts I sold on 1/18/07 expired OTM for a 4-week net return of about 1.8%.
- Fifth Third Bancorp (FITB) – The February 40-strike calls I sold on 2/06/07 against my long position in FITB (purchased 1/22/07) expired in the money and my shares were called, for a 1-month net return in the total position of 3.5%.
- Hershey (HSY) – The February 50-strike puts I sold on 1/24/07 expired OTM for a 3-1/2-week net return of about 1.1%.
- YRC Worldwide (YRCW) – The February 40-strike puts I sold on 1/26/07 expired OTM for a 3-week net return of about 2.3%.
New positions
Amgen (AMGN) – On Friday I sold some March 65 puts on AMGN as the stock fell 2% on news of safety concerns about the company’s top-selling cancer drug, Aranesp:
The stock appears headed back to its 64-65 support level and is becoming short- and intermediate-term oversold. If the 64-65 level doesn’t hold, then a further drop to the 60-61 level seems likely.
GlaxoSmithKline (GSK) – Last Tuesday I sold some March 57.5 calls against my long position in GSK (purchased 4/21/06):
The stock has been performing well lately after bottoming late last year in the low 50s, and is currently at the 57-58 level, which has proved to be resistance in the past. A move above this – which seems quite possible – would suggest a test of the 60 level. At the same time, a pull-back to the 56 level wouldn’t be surprising either.
Nordic American Tanker Shipping (NAT) – Last Wednesday I sold some March 35 puts on NAT as the stock fell almost 5% after the company reported a lower-than-expected fourth-quarter profit:
Despite the earnings news, NAT and other shipping stocks (like General Maritime) have been showing strength recently. For NAT, a move above the 37-38 resistance level would be positive, while a break below the 34-35 support level would change the intermediate-term outlook to negative.
Watchlists
New additions (or re-listings) to the “upside strength” list include include Alcoa (AA), Aetna (AET), Alexander & Baldwin (ALEX), America Movil (AMX), Automatic Data Processing (ADP), Avon Products (AVP), Baxter International (BAX), BE Aerospace (BEAV), Beckman Coulter (BEC), Cadence Design Systems (CDNS), Campbell Soup (CPB), Citizens Communications (CZN), Dow Chemical (DOW), First Energy (FE), FMC Technologies (FMC), General Maritime (GMR), GlaxoSmithKline (GSK)*, LifePoint Hospitals (LPNT), Lincoln National (LNC), Nokia (NOK), ON Semiconductor (ONNN), Synovus Financial (SNV), Tyson Foods (TSN), Wachovia Corp. (WB), Waste Connection (WCN), Xerox (XRX), and YRC Worldwide (YRCW).
New additions to the “oversold” list this week include Amgen (AMGN)* and Office Depot (ODP).
* I currently own and/or have an options position on this stock.
