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What Do We Do Monday Morning?, Issue #353 - Fiscal Cliff Avoided
January 06, 2013
Jan 7, 2013 - Issue #353
Fiscal Cliff Avoided
Fiscal cliff avoided. Next battle: Debt ceiling limit. Obama wants more spending & more debt.
Allen West: "If America reelects Obama to a second term, we deserve all the pain and misery that will ensue."
Volatility crashes as market avoids fiscal cliff threat. Stocks are vulnerable. Protect your stocks. Buy puts.
Look for opportunities to sell covered calls on upswings. It's called a 'protected collar' strategy. Institutions do it all the time. Shouldn't you?
Swing trade strategy: Buy itm puts. Buy stocks (or, better yet, itm calls) on declines & sell on rallies. Goal: Swing trade profits exceeding cost of put protection = risk free from that point on. Follow up strategy: Roll calls down or roll puts up. Repeat.
ION OPTIONS Ron Ianieri, "Unexpected news can destroy any chart!", has taught professional traders/market makers how to use options. Let him teach you.
MarketClub 'Trade Triangle' technology approach to timing is, IMO, profoundly effective.
MarketClub Primary Trend (monthly algorithms) on DJ-30 stocks:
UP (13) 43%:
AXP, BA, BAC, CAT, CSCO, HD, JNJ, JPM, MMM, PG, TRV, UNH, UTX.
DOWN (17) 57%:
AA, CVX, DD, DIS, GE, HPQ, IBM, INTC, KO, MCD, MRK, MSFT, PFE, T, VZ, WMT, XOM.
Dow Dogs (10 highest yielding):
T, VZ, INTC, MRK, DD, PFE, GE, HPQ, MCD, JNJ.
Dow Small Dogs (5 lowest priced among the 10 highest yielding):
T, PFE, GE, INTC, HPQ.
As of 12/31, corporate stock earnings yields on the S&P 500 (SPY) still above corporate bond yields (7.05% vs. 2.06%) thus favoring corporate stocks over corporate bonds 3.42 to 1. Keep your eye on earnings yields. That's what you're being paid to take risk. Dividend yields are only part of the picture. Gold up 5.69% vs. 1 yr ago (measure of inflation).
Countdown till 2014 elections: 44 weeks.
W. D. Gann, a keen market observer, although not an astronomer, nevertheless, was fascinated by the apparent coincidence of important market 'pivot points' and astronomical dates. Theories exist for estimating time and price of important market turning points but astronomical occurrences are computed with mathematical certainty.
There is no logical reason why these occurrences should coincide yet, empirically, they have.
The 'Full Moon' and 'New Moon', among others, have been cited. Therefore, one might be well advised to be aware of their occurrence. Note: The first 5 business days of 2008 concluded on a 'New Moon' and we all know how that worked out. Coincidence?
1/11 Friday - New Moon.
1/26 Saturday - Full Moon (Watch market action Friday & Monday).
During the next two weeks, the following DJ-30 components report earnings. Keep a sharp eye out for price swings, up or down, (possible trading on 'inside information'?) leading up to 'earnings day' (Subject to revision):
1/8 AA (4Q 2012 Earnings Season begins).
1/17 AXP, BAC, INTC, MSFT, UNH.
Dow score card for the week ending 1/4/13.
DJ-30: 13435.21 +497.10 +3.84%. The Real World (arithmetical) DJ-30: 58.31 +2.15 +3.84%.
UP: 29, DOWN: 1.
Trends (weekly charts): This is the subjective part.
Rising (Generally Higher Highs/Higher Lows) 18 (+17) 60%:
+*AA, +*AXP, +*BA, BAC, +*CAT, +*CSCO, +*DD, +*DIS, +*HPQ, +*INTC, +*JNJ, +*JPM, +*MMM, +*PFE, +*T, +*TRV, +*UTX, +*XOM.
Consolidating (Generally Lower Highs/Higher Lows) 12 (-8) 40%:
CVX, +*GE, +*HD, IBM, +*KO, MCD, +*MRK, MSFT, +*PG, UNH, +*VZ, +*WMT.
Declining (Generally Lower Highs/Lower Lows) 0 (-9) 0%:
+/- denotes change of direction.
* denotes change of category.
Comments? Ideas? Feedback? Let me have it, right between the eyes! I'd love to hear from you. Just reply to this zine and tell me what you think!
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