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What Do We Do Monday Morning?, Issue #352 - Fiscal Cliff Brinksmanship Continues
December 30, 2012
Dec 31, 2012 - Issue #352
Fiscal Cliff Brinksmanship Continues
Fiscal Cliff Brinksmanship Continues: 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."
10 (33%) of DJ-30 components are now in the upper 1/3 of their estimated 12 mo. forward price range, 11 (37%) middle 1/3, 9 (30%) bottom 1/3 (according to 'Trouncing the Dow' value method based on current 5 year TTM average earnings and highest high/lowest low PE ratios of previous 5 years).
Volatility rises as market takes hit from 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 puts, buy stocks on declines & sell on rallies. Goal: Swing trade profits exceeding cost of put protection = risk free from that point on. 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 (10) 33%:
BA, BAC, CSCO, HD, JNJ, JPM, PG, TRV, UNH, UTX.
DOWN (20) 67%:
AA, AXP, CAT, CVX, DD, DIS, GE, HPQ, IBM, INTC, KO, MCD, MMM, MRK, MSFT, PFE, T, VZ, WMT, XOM.
Dow Dogs (10 highest yielding):
T, VZ, INTC, MRK, PFE, HPQ, DD, GE, JNJ, MCD.
Dow Small Dogs (5 lowest priced among the 10 highest yielding):
T, PFE, GE, INTC, HPQ.
As of 11/30, corporate stock earnings yields on the S&P 500 (SPY) still above corporate bond yields (7.14% vs. 1.91%) thus favoring corporate stocks over corporate bonds 3.74 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.
Countdown till 2014 elections: 45 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?
12/13 Thursday - New Moon.
12/28 Friday - Full Moon.
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).
Dow score card for the week ending 12/28/12.
DJ-30: 12938.11 -252.73 -1.92%. The Real World (arithmetical) DJ-30: 56.16 -1.09 -1.90%.
UP: 1, DOWN: 29.
Trends (weekly charts): This is the subjective part.
Rising (Generally Higher Highs/Higher Lows) 1 (-12) 3%:
Consolidating (Generally Lower Highs/Higher Lows) 20 (+8) 67%:
AA, AXP, -*BA, CAT, -*CSCO, -*CVX, -*DD, -*DIS, HPQ, -*IBM, -*INTC, JNJ, -*JPM, -*MCD, -*MMM, -*MSFT, PFE, TRV, UNH, -*UTX.
Declining (Generally Lower Highs/Lower Lows) 9 (+4) 30%:
-*GE, HD, KO, MRK, PG, -*T, -*VZ, WMT, -*XOM.
+/- 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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