Russian Saber Rattling...

By: Mark McMillan | Mon, Apr 28, 2014
Print Email

4/28/2014 9:05:19 AM

Russian Saber Rattling...
Will there be war?

Recommendation: Take no action.

Click here to access our stock market chat rooms today! For a limited time, try our chat room for free. No subscription necessary to give it a try.

Stock Market Trends:

Stock Market Trends

- ETF Positions indicated as Green are Long ETF positions and those indicated as Red are short positions.

- The State of the stock market is used to determine how you should trade. A trending market can ignore support and resistance levels and maintain its direction longer than most traders think it will.

- The BIAS is used to determine how aggressive or defensive you should be with an ETF position. If the BIAS is Bullish but the stock market is in a Trading state, you might enter a short trade to take advantage of a reversal off of resistance. The BIAS tells you to exit that ETF trade on "weaker" signals than you might otherwise trade on as the stock market is predisposed to move in the direction of BIAS.

- At Risk is generally neutral represented by "-". When it is "Bullish" or "Bearish" it warns of a potential change in the BIAS.

- The Moving Averages are noted as they are important signposts used by the Chartists community in determining the relative health of the markets.

Best ETFs to buy now (current positions):

Long DIA at $161.48 as of December 19, 2013
Long QQQ at $85.99 as of December 19, 2013
Long SPY at $181.19 as of December 19, 2013

Click here to learn more about my services and for our ETF Trend Trading.

Value Portfolio:

Long SDRL at $33.90 on June 15, 2012 (Shares were put to us when options expired. We were paid $1.10 per share when we sold those options and bought shares for $35.00 each). We have collected dividends: March 5, 2014 $0.98, December 3, 2013 $0.95, September 5, 2013 $0.91, June 5, 2013 $0.88, $1.70 Dec 4, 2012, $0.84 Sep 4, 2012. Total = $5.28 in dividend payments.
Short FXE at $124.19 on August 24, 2012
Long UUP at $22.43 on August 24, 2012
Short FXE at $134.48 on October 4, 2013
Long SDRL at $35.43 on Feb 18, 2014
Long SDRL at $33.50 on March 21, 2014 (Shares were put to us when options expired. We were paid $1.50 per share when we sold those options and bought the shares for $35.00 each.

We publish new reports to our free newsletter every month. If you're not a member, sign up by clicking here: Free Stock Market Newsletter

The NASDAQ-100 lost most of two percent with many leading indexes losing two percent or more. Longer Term Bonds (TLT 111.33 +0.16) was nearly unchanged but remains elevated. Trading volume remained light with 675M shares traded on the NYSE. Trading volume on the NASDAQ dropped to average with 2.070B shares traded.

There was a single economic report of interest released:

The report was released twenty-five minutes after the open.

We are watching gold for a potential reversal in the Gold Miners Index (GDX 24.46 +0.53) added two percent and Gold (GLD 125.43 +0.87) added a fractional gain to close above its 20-DMA and even with its 200-DMA.

Apple (AAPL 571.94 +4.17) added most of one percent. AAPL constitutes about 20 percent of the NASDAQ-100 and nearly five percent of the S&P-500.

Seadrill Limited (SDRL 34.77 +0.51) bucked the bearish market moves and added 1.5%. It now trades above its 20- and 50-DMAs. It is still below its 200-DMA and is in a trading state. We sold March 2014 $35.00 put contracts for $150 at the open on Feb 18th and bought shares at $35.43. The stock is now trading ex-dividend for $0.98. The shares were put to us at $35.00 less the $1.50 per share we were paid for the puts, so we have an effective price of $33.50.

The U.S. dollar was unchanged and the Euro was nearly unchanged as well.

The yield for the 10-year fell two basis points to close at 2.67. The price of a barrel of crude oil fell -$1.34 to close at $100.60.

The implied volatility for the S&P-500 (VIX 14.06 +0.74) rose nearly six percent and remains barely below its 20-, 50, and 200-DMAs. Implied volatility for the NASDAQ-100 (VXN 18.59 +1.42) 7.17 +0.27) rose eight percent and remains well above its 200-DMA and just below its 20-DMA.

Market internals were bearish with decliners leading advancers 2:1on the NYSE and by 5:1 on the NASDAQ. Down volume led up volume 3:1 on the NYSE and by 5:1 on the NASDAQ. The index put/call ratio rose +0.18 to close at 1.30. The equity put/call ratio rose +0.10 to close at 0.71.


Friday saw volume lighten up. The norm for a Friday is at least slightly heavier volume, due to weekly options expiration. High beta equities tumbled more than one percent while the Down and S&P-500 saw losses of most of one percent. With the leading indexes dropping like rocks, caution should be exercised. With that said, the volume was light enough that it seemed more like traders being cautious than market participants pulling out of positions. There were continued worries over Russian sabre rattling with Ukraine. The U.S. and its Western European countries continue to look at implementation of further sanctions on Russia, and in particular, at how they can hurt Putin's closest allies economically. We shall see if the threats to the Russian economy and the collapse of wealth among Putin supporters will be enough to dissuade Mr. Putin from his choice of military conflict with Ukraine. Let's hope that the Russian capitalists win out over the communists and the Russians back away from the brink of war. We remain long as we monitor trading on Monday.

We hope you have enjoyed this edition of the McMillan portfolio. You may send comments to



Mark McMillan

Author: Mark McMillan

Mark McMillan
The McMillan Portfolio

Mark McMillan

Important Disclosure: Futures, Options, Mutual Fund, ETF and Equity trading have large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in these markets. Don't trade with money you can't afford to lose. This is neither a solicitation nor an offer to buy/sell Futures, Options, Mutual Funds or Equities. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this Web site. The past performance of any trading system or methodology is not necessarily indicative of future results.

Performance results are hypothetical. Hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not actually been executed, the results may have under- or over-compensated for the impact, if any, of certain market factors, such as a lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown.

Investment Research Group and all individuals affiliated with Investment Research Group assume no responsibilities for your trading and investment results.

Investment Research Group (IRG), as a publisher of a financial newsletter of general and regular circulation, cannot tender individual investment advice. Only a registered broker or investment adviser may advise you individually on the suitability and performance of your portfolio or specific investments.

In making any investment decision, you will rely solely on your own review and examination of the fact and records relating to such investments. Past performance of our recommendations is not an indication of future performance. The publisher shall have no liability of whatever nature in respect of any claims, damages, loss, or expense arising out of or in connection with the reliance by you on the contents of our Web site, any promotion, published material, alert, or update.

For a complete understanding of the risks associated with trading, see our Risk Disclosure.

Copyright © 2008-2014 Mark McMillan

All Images, XHTML Renderings, and Source Code Copyright ©