The Bears Stop The Bulls...
6/4/2014 8:58:36 AM
Helter Skelter trading...
Recommendation: Take no action.
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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
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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.
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Equities opened lower and the bulls began buying at the opening bell pushing prices higher to close the opening gap. After forty-five minutes, the bears launched an assault that lasted into late morning that saw equities hit their lows of the day. The bulls then stepped in to buy through much of the rest of the session but with a bit more than an hour remaining in the session, a bit more selling occurred followed by unenthusiastic buying. This left all three major indexes showing modest losses but all three remain in uptrend states and closed above their respective 20-, 50-, and 200-Day Moving Averages (DMAs). The Dow Jones Transports (IYT 144.9 -1.22) posted a large fractional loss while the Semiconductor Index (SOX 608.42 +5.58) did the opposite. Both remain above their 20-, 50- and 200-DMAs in uptrend states. The Russell-2000 (IWM 111.98 -0.27) posted a fractional loss again closing below its 50-DMA but above its 20-, and 200-DMAs. The Bank Index (KBE 32.36 +0.14) 22 +0.29), the Regional Bank Index (KRE 38.86 +0.13), and the Finance Sector ETF (XLF 22.38 +0.03) all added gains. All three remain above their 20- and 200-DMAs and the Finance Sector ETF remains above its 50-DMA. The bank indexes are in trading states while the finance sector maintains an uptrend state. Longer Term Bonds (TLT 111.57 -1.39) lost more than one percetn closing below its 20-DMA but above its 50- and 200-DMAs. It maintains a tradings state but has indicated a possible change to a BEARISH BIAS. Trading volume was again light with 657M shares traded on the NYSE. Trading volume on the NASDAQ was again light with 1.688B shares traded.
There were three economic reports of interest released:
- Factory Orders (Apr) rose +-0.7% versus an expected +0.5% rise
- Auto Sales (May) came in at 5.7M versus April's 5.3M
- Truck Sales (May) came in at 7.7M versus April's 7.5M
All reports were released during the session.
We are watching gold for a potential reversal in the Gold Miners Index (GDX 22.37 +0.08) added a fractional gain as did the price of Gold (GLD 120.01 +0.31), Both closed below their 20-, 50-, and 200-DMAs.
Apple (AAPL 637.54 +8.89) added more than one percent. AAPL constitutes about 20 percent of the NASDAQ-100 and nearly five percent of the S&P-500.
Seadrill Limited (SDRL 39.02 +0.58) again added more than one percent. It is in an uptrend 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 fell a tenth of one percent while the Euro rose two tenths of one percent.
The yield for the 10-year treasuries rose six basis points to close at 2.59. The price of a barrel of crude oil rose nineteen cents to close at $102.66.
The implied volatility for the S&P-500 (VIX 11.87 +0.29) rose more than two percent but remains well below its 200-DMA. The implied volatility for the NASDAQ-100 (VXN 14.35 +0.02) was essentially unchanged remaining well below its 200-DMA.
Market internals were bearish with decliners leading advancers 8:5 on both NYSE and the NASDAQ. Down volume edged up volume on both the NYSE and the NASDAQ. The index put/call ratio rose +0.21 to close at 1.38. The equity put/call ratio fell -0.04 to close at 0.58.
It was a free-for-all with equities going in various directions as all the major indexes closed modestly lower. The semiconductor index closed at a new multi-year high but the transports retreated. The bank indexes and finance sector added fractional gains while the Russell-2000 took a hit. In other words, light volume trading saw little change on Monday but market internals were bearish. Equities remain, for the most part, overbought and are vulnerable to a pull back. It appears that the bears will press their case and we will have to await the bulls reaction to determine whether we should maintain our long positions.
We hope you have enjoyed this edition of the McMillan portfolio. You may send comments to email@example.com.