The past two trading day's since my last post were not that great. For starters, the first trading day since my last post was a slightly down day, and all of my position's suffered. This includes my CVX Call position, since it started that day lower and only slightly made it above the previous day's open. In addition, on that down day, my Covered Call on MU was executed. However, the order didn't execute as expected. Today, the second day, was only a slightly up day. This day returned some of my losses from the previous day's declines.
Now in this post I am only going to discuss my Covered Call order as my other positions are nothing new. I was hoping for a Bull day, but was disappointed as MU opened slightly higher and then rallied for 20 plus cents after a short slide, just to give it all back before noon. And then for the rest of the day it just sat at that level.
First thing in the morning, my order was executed and filled at the openings initial high prior to it's early morning slide. The more disappointing thing about the opening purchase was that the Call side of the order wasn't sold at the 5 cents per contract share I expected. It actually filled at 1 cent. This gives me $1 per contract. The sad thing is that the sum of the option's commission and fees is the same total. This means that the I was not able to off set the cost of the commission on the Stock side of the order. Lesson learned, wait for the option to have some value before selling it. That is my opinion, you can take it or leave it.
Disclaimer: See bottom of page. http://investorsopinion.blogspot.com
Wednesday, November 11, 2009
Monday, November 9, 2009
How The Economy Could Have Been Fixed, Already.
I have been mulling this over in my head for some time and have finally decided to write it out. Everything I read and hear tells me the same thing. What has been done so far to "fix" the economy is only a temporary band-aid, nothing is actually fixed.
For one, jobs are still hard to come by. We also have a large number of foreclosures, and home prices falling. Banks are still being unreasonably stingy with loaning money under traditional arrangements. The bailed-out banks are being allowed to falsify their accounts to make themselves seem like they are making money when they are not. And the number of infrastructure projects being completed is far and in between.
Generally speaking, government has been getting involved in the wrong way in just about everything. Government's job in the economy is to set policy and regulations to protect the American public from being taken advantage of through the making of stupid, uninformed decisions. But instead of doing that, government removed policy and regulations and now things the solution is to print money and give it to the same institutions that were involved in creating the crisis. This is practically the definition of insanity.
Then we have the desire to provide universal health care. As usual, there is a misunderstanding of what universal heath care should include. Not to mention a delusional idea about how much it is going to cost and how far it should reach. In this post, I will cover the general outline of what should have been done from start to finish. Understand those words. General outline.
To start, the bail-out money should never have been given out so quickly and with so few restrictions and conditions. First, I personally would have re-instituted all of the banking and lending regulations that were dropped bank in the Clinton administration and instituted a temporary freeze, a moratorium, on all foreclosures and non-traditional mortgage origination for any bank or lender claiming to need assistance. In the mean time, the home owners would still be responsible for getting payed up either through selling their home, modifying their loan, or catching up on payments. It would be essentially creating some breathing room. Hm, did I just save people from loosing their homes? I guess I did. How long? Not very, but at least they are going to have the opportunity to figure out a solution in the mean time. Oh yeah, I also fixed the hemorrhage that started the mess.
Next would be to put together a department of accountants and economists to do an actual audit of the banks to determine what their fiscal health is and what investment instruments budgetary items they have been burning money on. After all, would the IRS allow a tax payer to do their own audit? Seriously!?! Hm, did I just create a few government jobs there? I guess I did. How many? I don't know, a few hundred or thousand for a few months? Anyway, moving on.
After the health of the bank has been determined, the department would design a custom plan to correct each banks fiscal ailments. The plan would contain a number of options including budget cuts, asset liquidation, and salary re-negotiations. At this point, I would also institute a regulation the demands that executive pay be tied to performance. Now the entire plan wouldn't be forced on the bank. But, if they want bail-out assistance, then they should be willing to comply with enough to be deserving of assistance. Other wise, you must not really be "too big to fail." And, yes, I know this will probably cost jobs. But at least it will be a step in the right direction.
Next, would be to something that I thought was suppose to have been done but have yet to find. Please, point it out to me if you know where it is. There should be a government website that lists all the infrastructure projects and pet projects that the Congressmen and Senators want to get done. This website would provide all the necessary information related to the project that contractors would be able to analyze in order to bid on so that they can be selected to do the project. In each of the projects, the key to obtaining and holding on to the contract would be the number of jobs the contractor would be able to create. These jobs would have to be filled by citizens and documented aliens.
In order to guarantee that this key point was fulfilled, the government would have a department of rotating document verification clerks that would go around to each of the contract companies and verify the citizenship and residency documentation for each employee. Hm, how many jobs created there? Thousands? Hundreds of thousands? But what about the border countries that have immigration issues? Wouldn't the majority of the possible workers be disqualified? This sounds like a perfect opportunity for a citizenship amnesty drive. Get these individual documented and put to work.
This could also be used as a means to guarantee the flow of money from the government bail-out to the banks into the economy. As the banks are being supplied enough money to make them solvent, the winning contractors would be contractually obligated to open a line of credit with one of the bailed-out banks for the purpose of equipment, supplies and wages. To confirm this is done properly, the Government would also have a department of rotating clerks to reconcile the contractors books with the line of credit to make sure it is only being used for such items. Wow, I just keep creating more jobs!
Now, on to universal health care. What should it include? Well for starters, it is not the government's job to baby sit each citizen. It is the government's job to protect the health of the general population. To me, the things that should be universal are vaccinations, triage, emergency care, and annual physicals. Anything past that should be covered by an individuals own insurance. Doing so forces a person to understand that they are responsible for their own well being. But, in order for a person to be able to do that, the government does need to put some regulations in place for the insurance industry.
For one, a citizen should never be denied coverage for any preexisting condition, especially one that is genetic. Other than that, I am quite clueless. However, a panel of doctors, economists, accountants, and statisticians should be able to figure out the most reasonable guidelines for determining insurance coverage. Wow, even more jobs created! I'm on a roll. That is my opinion, you can take it or leave it.
Disclaimer: See bottom of page. http://investorsopinion.blogspot.com
For one, jobs are still hard to come by. We also have a large number of foreclosures, and home prices falling. Banks are still being unreasonably stingy with loaning money under traditional arrangements. The bailed-out banks are being allowed to falsify their accounts to make themselves seem like they are making money when they are not. And the number of infrastructure projects being completed is far and in between.
Generally speaking, government has been getting involved in the wrong way in just about everything. Government's job in the economy is to set policy and regulations to protect the American public from being taken advantage of through the making of stupid, uninformed decisions. But instead of doing that, government removed policy and regulations and now things the solution is to print money and give it to the same institutions that were involved in creating the crisis. This is practically the definition of insanity.
Then we have the desire to provide universal health care. As usual, there is a misunderstanding of what universal heath care should include. Not to mention a delusional idea about how much it is going to cost and how far it should reach. In this post, I will cover the general outline of what should have been done from start to finish. Understand those words. General outline.
To start, the bail-out money should never have been given out so quickly and with so few restrictions and conditions. First, I personally would have re-instituted all of the banking and lending regulations that were dropped bank in the Clinton administration and instituted a temporary freeze, a moratorium, on all foreclosures and non-traditional mortgage origination for any bank or lender claiming to need assistance. In the mean time, the home owners would still be responsible for getting payed up either through selling their home, modifying their loan, or catching up on payments. It would be essentially creating some breathing room. Hm, did I just save people from loosing their homes? I guess I did. How long? Not very, but at least they are going to have the opportunity to figure out a solution in the mean time. Oh yeah, I also fixed the hemorrhage that started the mess.
Next would be to put together a department of accountants and economists to do an actual audit of the banks to determine what their fiscal health is and what investment instruments budgetary items they have been burning money on. After all, would the IRS allow a tax payer to do their own audit? Seriously!?! Hm, did I just create a few government jobs there? I guess I did. How many? I don't know, a few hundred or thousand for a few months? Anyway, moving on.
After the health of the bank has been determined, the department would design a custom plan to correct each banks fiscal ailments. The plan would contain a number of options including budget cuts, asset liquidation, and salary re-negotiations. At this point, I would also institute a regulation the demands that executive pay be tied to performance. Now the entire plan wouldn't be forced on the bank. But, if they want bail-out assistance, then they should be willing to comply with enough to be deserving of assistance. Other wise, you must not really be "too big to fail." And, yes, I know this will probably cost jobs. But at least it will be a step in the right direction.
Next, would be to something that I thought was suppose to have been done but have yet to find. Please, point it out to me if you know where it is. There should be a government website that lists all the infrastructure projects and pet projects that the Congressmen and Senators want to get done. This website would provide all the necessary information related to the project that contractors would be able to analyze in order to bid on so that they can be selected to do the project. In each of the projects, the key to obtaining and holding on to the contract would be the number of jobs the contractor would be able to create. These jobs would have to be filled by citizens and documented aliens.
In order to guarantee that this key point was fulfilled, the government would have a department of rotating document verification clerks that would go around to each of the contract companies and verify the citizenship and residency documentation for each employee. Hm, how many jobs created there? Thousands? Hundreds of thousands? But what about the border countries that have immigration issues? Wouldn't the majority of the possible workers be disqualified? This sounds like a perfect opportunity for a citizenship amnesty drive. Get these individual documented and put to work.
This could also be used as a means to guarantee the flow of money from the government bail-out to the banks into the economy. As the banks are being supplied enough money to make them solvent, the winning contractors would be contractually obligated to open a line of credit with one of the bailed-out banks for the purpose of equipment, supplies and wages. To confirm this is done properly, the Government would also have a department of rotating clerks to reconcile the contractors books with the line of credit to make sure it is only being used for such items. Wow, I just keep creating more jobs!
Now, on to universal health care. What should it include? Well for starters, it is not the government's job to baby sit each citizen. It is the government's job to protect the health of the general population. To me, the things that should be universal are vaccinations, triage, emergency care, and annual physicals. Anything past that should be covered by an individuals own insurance. Doing so forces a person to understand that they are responsible for their own well being. But, in order for a person to be able to do that, the government does need to put some regulations in place for the insurance industry.
For one, a citizen should never be denied coverage for any preexisting condition, especially one that is genetic. Other than that, I am quite clueless. However, a panel of doctors, economists, accountants, and statisticians should be able to figure out the most reasonable guidelines for determining insurance coverage. Wow, even more jobs created! I'm on a roll. That is my opinion, you can take it or leave it.
Disclaimer: See bottom of page. http://investorsopinion.blogspot.com
Portfolio Update
Today was a profitable day in the market. All of the major indices moved up at least a percent or two and all of my commodity ETFs I watch also moved up, although not as strongly. Currently, all but my position in CVX went up. Overall, this still leaves me in the red for this cycle of investments. But because of today's move, I have been given confirmation that some stocks I have been watching are attempting to make bull moves.
In my previous post I announced that I was watching CEPH, GNW, MU, PCS, and S. Of these, I am making a play on one of them, MU. The kind of play I am making on it is a Covered Call. This type of play involves buying at least 100 shares of a stock and then selling a Call option against it. For me, I will be buying enough shares to sell the closest $9 Call against it. I chose $9 because that was the most recent resistance point it had reached.
If you have read any of my previous posts, you might have gleaned that I have no interest in holding non-dividend paying stocks, and that is still the case. In addition, selling the $9 Call doesn't do me any huge favors. My reason for this trade is to produce a little capital on a stock that has been oversold for a couple of weeks. The sale of the Call is simply to offset the commission expenses and set an exit point for collecting profits if it runs up fast. It is possible that MU will reach and break through the resistance since it only has 11 days until expiration. It is also possible that it will stall under the resistance for some time before moving in either direction. If it does happen to close under resistance by expiration, I will either sell another Call against it or cash out. That is my opinion, you can take it or leave it.
Disclaimer: See bottom of page. http://investorsopinion.blogspot.com
In my previous post I announced that I was watching CEPH, GNW, MU, PCS, and S. Of these, I am making a play on one of them, MU. The kind of play I am making on it is a Covered Call. This type of play involves buying at least 100 shares of a stock and then selling a Call option against it. For me, I will be buying enough shares to sell the closest $9 Call against it. I chose $9 because that was the most recent resistance point it had reached.
If you have read any of my previous posts, you might have gleaned that I have no interest in holding non-dividend paying stocks, and that is still the case. In addition, selling the $9 Call doesn't do me any huge favors. My reason for this trade is to produce a little capital on a stock that has been oversold for a couple of weeks. The sale of the Call is simply to offset the commission expenses and set an exit point for collecting profits if it runs up fast. It is possible that MU will reach and break through the resistance since it only has 11 days until expiration. It is also possible that it will stall under the resistance for some time before moving in either direction. If it does happen to close under resistance by expiration, I will either sell another Call against it or cash out. That is my opinion, you can take it or leave it.
Disclaimer: See bottom of page. http://investorsopinion.blogspot.com
Friday, November 6, 2009
Portfolio Update: Week In Review, Lessons Learned, and Personal Picks.
This week has been a roller-coaster of mistakes and bad timing for me. Starting last week, I get into five positions in varying industries, which isn't bad. AXP, CVX, FPL, WFC, and V. The problem with the positions I took was the directions I took and when I got into them.
With AXP, I got into it as a Put using the reasoning that the secondary indicators on the daily and weekly charts were overbought and had turned down on the daily. What I failed to do was read the volume. It had been better than average for two straight days. I should of stayed out.
With CVX, I also got into it as a Put using the same reasoning as AXP. The next red flag should have been that it had just broken above the resistance trend line of the inclining channel it had been in. Before getting into it, I should have waited for it to drop back below it. Realizing this mistake, 3 days later I swap my Put for a Call. Unfortunately, on that day it bounced down from a horizontal price resistance level of about $78.50 ending near the inclining trend line and has since then been riding along the inclining trend line it had just broken above. Now I have a Call losing value due to time decay as it continues to get squeezed by converging trend lines. I am patiently waiting to see which one it breaks out from before recouping what I have left. The good news is that I have until January to see what happens and the lines seem to converge after Thanksgiving.
With FPL, I got into it as a Call but this decision was passed on the secondary indicators on the daily and weekly charts being oversold. Without any proof from price movement or volume I jump in. It has since then continued to slide in price and I continue to hold it with apparent foolish hope that it will finally bounce since it is in the range of it's 52 week low and it tends to rally strong during the winter.
With WFC, I got into it as a Put. This was actually the right decision as it is was in a down trend at the time, the secondary indicators on both the daily and weekly charts indicated overbought and declining, and the strongest volume day in the past week was negative. The problem was that two days later I see a bullish candlestick on a very up day, and the MACD on the daily chart reacts to it. I assume that I got it at the bottom and that it is reversing already. I totally failed to acknowledge the lack of volume. To make matters worse, instead of waiting for confirmation, I swap my Put for a Call instead of just cashing out. If I had just waited, I would be up $69. However, I have been losing value on my Call because it is near a support level it has bounced off of three times before, and since I have until January on it, I am hoping it will bounce off of there and will travel back up to or past $30.
With V, I also got into it as a Put for similar reasons for getting into AXP and CVX. The problem here was that I failed to consider it's earnings report came out the same day of the trade. If I had remembered to do that, I would have known to wait and see. Now I have been stopped out of that position as it hit and exceeded it's most recent high. Of all my stocks to swap Puts for calls, I don't with this one. And now, it is up $2.50. I would have been up 50-100% just this week alone with $80 and $85 being the next resistance levels. Just plain stupid on my part.
In addition to the swaps of the above trading activity, I also got into SLV and USO as Calls. My reasoning being that SLV had just bounced off of a support level it bounced off of before, and USO had just been on an up trend and pulled back to a bounced off of a resistance level it had just broken through. ("Old resistance becomes new support.") The good news is that SLV has done well by me. It has rallied up over a dollar on strong volume and is holding there on weak volume. The bad news is that USO has been bouncing off of it's support level ever since. In addition it has dropped below an inclining trend line today. This action was on slightly stronger than average volume and leads me to believe that next week it will open and close below the horizontal support level I just mentioned. If it does so, I will be closing my position on it. If it doesn't, I will adjust the inclining trend line.
Things to remember:
- Pay attention to price movement AND volume more than secondary indicators.
- Check for earnings reports.
- Trade only after confirmation. (More than one period against the trend.)
Currently I am watching CEPH, GNW, MU, PCS, and S. These stocks were reported to be fundamentally ready to rally. I am not so certain about that after my experience with FPL. As of today, only CEPH and MU have broken their apparent downward trends with confirmation. However, CEPH has a resistance level at $60 that isn't too far away and another at $62.50 I will probably wait do see if it breaks out over $60 before getting in since it doesn't have earnings to report until February 2010. MU is currently short of it's next resistance level of $7.50. I want to see another confirmation day before I get in. Then from there it is $9. The uneasy thing is that it has earnings to report after the December 2009 options expiration. I should probably be out of it by then, so I don't really have a lot of time. That is my opinion, you can take it or leave it.
Disclaimer: See bottom of page. http://investorsopinion.blogspot.com
Thursday, November 5, 2009
Portfolio Update In Short.
Today, I had a little of everything. My Put on AXP stopped out as expected. The underlying stock of CVX, FPL, and WFC all gained a little ground today, but only my WFC Call gained value. Intraday trading left my CVX and FPL positions a little in the red because their closing values ended up but far from their intraday highs. And, as for my commodity Calls on SLV and USO, they pulled back some so that only my Call in SLV is in the green.
CVX continues to ride an inclining trend line. FPL still closed above yesterday's high, however, it put in a doji star which isn't a promising candlestick. The good news is that the asking price is over $2 from today's closing indicating that the move may not be over. WFC produced a candlestick with a long lower shadow but a Bullish body indicating that demand could be more powerful. In relation to yesterday the candlestick pattern is a Bullish Harami pattern, which indicates a change in direction toward the upside is likely. Both SLV and USO put in small doji like candlesticks positioned slightly lower than yesterday's closing. This may only be a pull back as the trading volume was light. So I will be staying in all of my positions for now. That is my opinion, you can take it or leave it.
Disclaimer: See bottom of page. http://investorsopinion.blogspot.com
CVX continues to ride an inclining trend line. FPL still closed above yesterday's high, however, it put in a doji star which isn't a promising candlestick. The good news is that the asking price is over $2 from today's closing indicating that the move may not be over. WFC produced a candlestick with a long lower shadow but a Bullish body indicating that demand could be more powerful. In relation to yesterday the candlestick pattern is a Bullish Harami pattern, which indicates a change in direction toward the upside is likely. Both SLV and USO put in small doji like candlesticks positioned slightly lower than yesterday's closing. This may only be a pull back as the trading volume was light. So I will be staying in all of my positions for now. That is my opinion, you can take it or leave it.
Disclaimer: See bottom of page. http://investorsopinion.blogspot.com
Quick Portfolio Update
As of the closing bell on Wednesday, November 4, 2009, this is what my portfolio looks like. My AXP Put remains in place although it continues to lose value. I have a stop in place at about 75% of it's value that I will be leaving in place.
My CVX Call continues to ride this trend line I mentioned in my last update, so I will be leaving it as is for a few more days, or until it drops below it.
FPL had a large price movement, but it was on light volume and it gave back more than half of it's gains for the day in the final hours. This says, conviction doesn't yet seem to be there. However, winters for this stock tend to be profitable, and all indicators I watch say upward movement is to be expected. Also, since today's movement did give me back some of my losses on the Call option, I will be holding on to it and watching how it goes.
WFC has dropped a lot further than I thought it would. It is, however, reaching a support level and the daily chart indicators say an upward movement is a higher probability. However, the weekly chart indicators say that the bull may be running out of steam. If it does go up soon, this is likely the last bull run it will have.
V put in some strong price movement in today only to pull back to the opening. Unfortunately, I was stopped out of my Put position by this powerful up move of the day. V has been a difficult animal to tame. There is some suggestion that more upward movement is there, but on a week to week, the bull not as convincing.
I have lost quite a bit of money on these last few trades. My only consolation is that my Call positions on SLV and USO have been hedging against the losses. Unfortunately, both just put in doji star price movements. That isn't a favorable candlestick, and the other chart indicators are a little mixed, but suggest that near term profitability has a good chance. They are both nearing resistance points, so I will have to wait and see how strong the resistance is. That is my opinion, you can take it or leave it.
Disclaimer: See bottom of page. http://investorsopinion.blogspot.com
My CVX Call continues to ride this trend line I mentioned in my last update, so I will be leaving it as is for a few more days, or until it drops below it.
FPL had a large price movement, but it was on light volume and it gave back more than half of it's gains for the day in the final hours. This says, conviction doesn't yet seem to be there. However, winters for this stock tend to be profitable, and all indicators I watch say upward movement is to be expected. Also, since today's movement did give me back some of my losses on the Call option, I will be holding on to it and watching how it goes.
WFC has dropped a lot further than I thought it would. It is, however, reaching a support level and the daily chart indicators say an upward movement is a higher probability. However, the weekly chart indicators say that the bull may be running out of steam. If it does go up soon, this is likely the last bull run it will have.
V put in some strong price movement in today only to pull back to the opening. Unfortunately, I was stopped out of my Put position by this powerful up move of the day. V has been a difficult animal to tame. There is some suggestion that more upward movement is there, but on a week to week, the bull not as convincing.
I have lost quite a bit of money on these last few trades. My only consolation is that my Call positions on SLV and USO have been hedging against the losses. Unfortunately, both just put in doji star price movements. That isn't a favorable candlestick, and the other chart indicators are a little mixed, but suggest that near term profitability has a good chance. They are both nearing resistance points, so I will have to wait and see how strong the resistance is. That is my opinion, you can take it or leave it.
Disclaimer: See bottom of page. http://investorsopinion.blogspot.com
Tuesday, November 3, 2009
Portfolio Update In Summary Format
Today was what would be called a flat day. No real movement in either direction for the majority of indices, except for the Russel 2000 that put in a Bullish Engulfing candlestick. A move of over 1%. Good job small caps. Anyway, lets get to my portfolio.
Starting at the top, AXP has been maintaining a very narrow trading range for a few weeks now. Because of this, the secondary indicators I use have been smoothed out to a point where directionality is hard to predict. It may break out to the positive side. I am setting a stop on my Put 25% under where I bought it and will let it ride itself out for at least another week.
The stock, CVX closed 6 cents above yesterdays close, but this is after opening below two of my previously drawn trend lines which intersect a couple days from now. On Friday, a high volume sell off day was put in and today the secondary indicators on both daily and weekly charts are showing signs of weakness. If tomorrow the value closes below my aforementioned trend lines, I will consider closing out my position. Ideally I should consider swapping out my Call for a Put, but I have just recently done this same swap in reverse. If I wasn't uncertain about this being subject to the wash sale rule, I would do the swap. The funny thing is that if I had left things alone, I would be almost right back where I was before the swap. Is it wrong for me to start hoping for higher gas prices?
Today, FPL closed up today after almost two weeks of consistent declines. This positive move, however, is on light volume and the close was below a lower trend line in a downward channel. The good news is that it is drastically oversold in both daily and weekly charts. The bad news is that I have held on to it way longer than I should have. I am almost 40% in the whole. I should have set my stop back at 1.95 and currently it is at 1.65. I really believe there is a reversal at this point, but I am not confident about the potential. I am unsure what to do. I will wait to see what tomorrow brings.
My second financial position, WFC, opened low but closed high today. Yesterday's low could possibly be the bottom of a upward channel that I have been expecting to see it make for the past few days. The daily indicators show the possibility of a directional reversal but the weeklies still indicate more downside potential. If there is going to be a bounce, this week should reveal it, and my decision to swap my Put for a Call will start to pan out. The funny thing is that if I had chosen to stay into my Put until this week, I would be up about 15% and swapping into a call position would be, potentially, more lucrative.
My last financial position, V, closed slightly higher today, but with little movement above the upper trend line of an upward channel. Both the daily and weekly chart have indications of an overbought condition with weakening momentum. Also, there is a higher-lows trend line that is tightening on this upward channel's upper trend line, so if it closes below this trend line of higher-lows, the upward momentum could be over and I could see a price recovery of my Put as it heads toward the lower trend line of the channel. Unfortunately, it will have to recover almost 40% of the original purchase price before I see any profit. That teaches me not to see when the next earnings report is.
Now for my commodity ETF's. First is SLV which closed almost a dollar over yesterday's close, putting me into the green on this position. I am expecting to see a net move of another dollar to the upside before it reverses again. If so, I will see about 90% profit on this position.
Finally, USO closed higher after starting near a trend line of higher-lows produced about a month ago. It still has about $2 worth of price movement before it hits its highest-high of the last quarter. However, it is showing overbought on the weekly charts and barely oversold on the daily charts. Not to mention there is the slightest indication of a trend of higher highs that my prevent it from gaining more than a dollar in price in the next day or so. And to add to the negativity, there wasn't a lot of volume behind the last couple days of upward movement. Again, is it wrong for me to start hoping for higher gas prices?
As far as the general market is concerned, the daily charts look like a reversal in price direction is appropriate to expect. However, if you look at the indicators on a weekly chart, the market is overbought, so any reversal in price direction can not be expected to break through the most recent highs of the past month. Be prepared for a cold winter in the market. That is my opinion, you can take it or leave it.
Disclaimer: See bottom of page. http://investorsopinion.blogspot.com
Starting at the top, AXP has been maintaining a very narrow trading range for a few weeks now. Because of this, the secondary indicators I use have been smoothed out to a point where directionality is hard to predict. It may break out to the positive side. I am setting a stop on my Put 25% under where I bought it and will let it ride itself out for at least another week.
The stock, CVX closed 6 cents above yesterdays close, but this is after opening below two of my previously drawn trend lines which intersect a couple days from now. On Friday, a high volume sell off day was put in and today the secondary indicators on both daily and weekly charts are showing signs of weakness. If tomorrow the value closes below my aforementioned trend lines, I will consider closing out my position. Ideally I should consider swapping out my Call for a Put, but I have just recently done this same swap in reverse. If I wasn't uncertain about this being subject to the wash sale rule, I would do the swap. The funny thing is that if I had left things alone, I would be almost right back where I was before the swap. Is it wrong for me to start hoping for higher gas prices?
Today, FPL closed up today after almost two weeks of consistent declines. This positive move, however, is on light volume and the close was below a lower trend line in a downward channel. The good news is that it is drastically oversold in both daily and weekly charts. The bad news is that I have held on to it way longer than I should have. I am almost 40% in the whole. I should have set my stop back at 1.95 and currently it is at 1.65. I really believe there is a reversal at this point, but I am not confident about the potential. I am unsure what to do. I will wait to see what tomorrow brings.
My second financial position, WFC, opened low but closed high today. Yesterday's low could possibly be the bottom of a upward channel that I have been expecting to see it make for the past few days. The daily indicators show the possibility of a directional reversal but the weeklies still indicate more downside potential. If there is going to be a bounce, this week should reveal it, and my decision to swap my Put for a Call will start to pan out. The funny thing is that if I had chosen to stay into my Put until this week, I would be up about 15% and swapping into a call position would be, potentially, more lucrative.
My last financial position, V, closed slightly higher today, but with little movement above the upper trend line of an upward channel. Both the daily and weekly chart have indications of an overbought condition with weakening momentum. Also, there is a higher-lows trend line that is tightening on this upward channel's upper trend line, so if it closes below this trend line of higher-lows, the upward momentum could be over and I could see a price recovery of my Put as it heads toward the lower trend line of the channel. Unfortunately, it will have to recover almost 40% of the original purchase price before I see any profit. That teaches me not to see when the next earnings report is.
Now for my commodity ETF's. First is SLV which closed almost a dollar over yesterday's close, putting me into the green on this position. I am expecting to see a net move of another dollar to the upside before it reverses again. If so, I will see about 90% profit on this position.
Finally, USO closed higher after starting near a trend line of higher-lows produced about a month ago. It still has about $2 worth of price movement before it hits its highest-high of the last quarter. However, it is showing overbought on the weekly charts and barely oversold on the daily charts. Not to mention there is the slightest indication of a trend of higher highs that my prevent it from gaining more than a dollar in price in the next day or so. And to add to the negativity, there wasn't a lot of volume behind the last couple days of upward movement. Again, is it wrong for me to start hoping for higher gas prices?
As far as the general market is concerned, the daily charts look like a reversal in price direction is appropriate to expect. However, if you look at the indicators on a weekly chart, the market is overbought, so any reversal in price direction can not be expected to break through the most recent highs of the past month. Be prepared for a cold winter in the market. That is my opinion, you can take it or leave it.
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