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The Inner Circle, Issue #409 - Imperial Presidency
February 08, 2014
Dynamic Blog: Imperial Presidency.
Stocks rise until they meet resistance then reverse until they find support.
Anytime a quality company becomes available at depressed prices, (IMO) it should be bought.
MarketClub's Trade Triangle Technology algorithm currently ranks INTC Primary (monthly) Trend 'UP'.
INTC is now the 3rd of 10 highest dividend yielding stocks in the 'Dow Dogs' (3.75%).
INTC is now the 1st of 5 lowest priced stocks among the 'Dow Small Dogs'.
1/15: Day before earnings announced, an opportunity again presented itself to roll-up 'protective' puts at advantageous prices thereby locking in gains without sacrificing further upside potential (beats the hell out of using 'stops'). Did you take advantage?
1/16 After close, management announced expecting lower revenues going forward.
1/17 INTC gets hit hard at opening but closes well off the 25.25 low.
Week ending 2/7 INTC closed 24.20 (below the 50 SMA on the daily chart - unfavorable).
Protective puts doing their job.
In the event of a rally running out of steam, always be prepared to switch to 'premium collection mode' by selling front month (or no more than 2nd month out) ATM covered calls thereby morphing into a 'protected collar' position.
Key primary trend algo to watch: 12/3 low 23.40 (lowest low - last 3 mo).
Recent resistance pivot point: 1/15 high 27.12.
INTC currently searching for support after breaking 1/9 low 25.25.
Critical: 11/19 50 SMA crossed above 200 SMA on weekly chart = 'Golden Cross' (favorable).
Earnings: 5 yr avg EPS: 1.84. TTM EPS: 1.89. Current P/E: 12.80. Forward P/E: 12.98.
Est Avg Yr EPS: 1.85. Est Yr High EPS: 2.12. Est Yr Low EPS: 1.70 (per analysts).
Next earnings date: 4/15.
The combination of low price/high yield + support at the 50 & 200 SMA (at least, on weekly chart) = opportunity (IMO).
Whether you buy stock, protect with puts (& collect dividends) or buy calls (whatever suits your style), a limited risk/high reward position can be constructed. Each strategy has its own follow-up tactics, depending on how it plays out.
UnitedHealth Group (UNH) Warning: Political Risk? (Obamacare).
Week ending 2/7 UNH closed 71.36.
UNH still below its 50 but above the 200 SMA on daily chart (mixed).
UNH above both 50 & 200 SMA on weekly chart (favorable).
MarketClub's monthly 'Trade Triangles' ranks UNH 'UP' in primary (monthly) but 'DOWN' on weekly trends (mixed). So what's the problem?
Critical: Are we witnessing distribution (informed selling) taking place on the way up? Applicable to the entire health insurance industry?
Week ending 9/20, 'Bearish Engulfing + 6' candlestick formation (weekly chart) indicates serious liquidation took place.
Reportedly health insurers received bad data from federal government causing heavy sell off.
Recent resistance pivot: 1/7 high 77.33.
UNH currently searching for support after breaking 1/29 low 70.84.
Key primary trend support algo to watch: 11/1 low 67.95 (lowest low - last 3 mo).
Earnings are rising (favorable).
Earnings: 5 yr avg EPS: 4.57. TTM EPS: 5.50. Current P/E: 12.97. Forward P/E: 12.67.
Est Avg Yr EPS: 5.59. Est Yr High EPS: 5.65. Est Yr Low EPS: 5.40 (per analysts).
Next earnings date: 4/17.
Cisco Systems (CSCO):
Week ending 2/7 CSCO closed 22.67 (Yield: 3.02%).
CSCO is currently out of the 'Dow Dogs'.
Key primary resistance algo to watch: 11/13 high 24.00 (highest high - last 3 mo).
Current resistance algo to watch: 1/22 high 22.95 (highest high - last 3 wks).
Recent support: 2/4 low 21.40.
Currently searching for resistance.
Double bottom formed between 4/19 low 19.98 & 12/13 low 20.22 (key primary support algo).
Critical: Break this and computer screens light up all over the world. Technically, CSCO would be in deep shit.
CSCO currently above the 50 SMA but below the 200 SMA on daily chart (mixed). Weekly chart: Currently below the 50 SMA but above the 200 SMA (mixed).
Earnings are rising, so far, (management lowered forward sales projections).
Earnings: 5 yr avg EPS: 1.37. TTM EPS: 1.84. Current P/E: 12.32. Forward P/E: 11.38.
Est Avg Yr EPS: 1.98. Est Yr High EPS: 2.03. Est Yr Low EPS: 1.86 (per analysts).
Next earnings date: 2/12/14.
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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