The bulls get ambushed…
All of Wednesday’s gains lost and then some…
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
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
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
The Moving Averages are noted as they are important signposts used by the
Chartists community in determining the relative health of the
ETFs to buy now (current positions):
DIA at $161.48 as of December 19, 2013
SPY at $181.19 as of December 19, 2013
here to learn more about my services and for our ETF Trend
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: June 10,
2014 $1.00, 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 = $6.28
in dividend payments.
FXE at $124.19 on August 24, 2012
UUP at $22.43 on August 24, 2012
FXE at $134.48 on October 4, 2013
SDRL at $35.43 on Feb 18, 2014
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
have collected dividends: June 10, 2014 $1.00.
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Stock Market Newsletter
Equity indexes were rocked with
losses on Thursday. After a
modestly lower open, equities plunged lower through the morning and began
bouncing into the noon hour. The
major indexes renewed their plunge lower, albeit modestly and finished at or
very near their lows. All of them
saw losses of more than 1.5% with the NASDAQ-100 losing two percent. Other equity indexes generally had
smaller percentage losses as they recovered modestly through the afternoon. Still, all equity indexes we monitor
closed below their 20-Day Moving Averages (DMAs) with the S&P-500, Russell-2000 (IWM 110.13 -1.89), the Dow Jones Transports (IYT 149.95
-2.13), the Bank Index (KRE 32.05
-0.45), and the Regional Bank Index
(KRE 38.09 -0.58) closing below their respective 50-DMAs. Only the Russell-2000 is in a downtrend
state and it is the only equity index with a BEARISH BIAS at this time. Longer Term Bonds (TLT 116.17 +1.36)
added more than one percent and closed above its 20-, 50-, and 200-DMAs. It remains in a trading state and
maintains its BEARISH BIAS. Trading
volume increased but remained below average with 737M shares traded on the NYSE. Trading volume on the NASDAQ increased
to average with 1.914B shares
were four economic reports of interest released:
Jobless Claims for last week came in at 293K versus an expected
Jobless Claims for last week came in at 2.439M versus an expected
Goods Orders (Aug) fell -18.2% versus an expected -16.3%
Orders ex-transportation (Aug) came in at 504K versus an expected
first report was released hours before the open while the last report was
released a half hour into the session.
(AAPL 97.87 -3.88) plunged -3.8%.
AAPL constitutes about 20 percent of the NASDAQ-100 and nearly five
percent of the S&P-500.
(SDRL 26.97 -0.71) added to its losses as it attempts to find a bottom among
significant market angst. We are
looking for SDRL to muster a rally attempt but we have seen no definitive sign
of a bottom yet. SDRL is in a
downtrend state and closed below its 20-, 50-, and 200-DMAs. We sold March 2014 $35.00 put contracts
for $150 at the open on Feb 18th, 2014 and bought shares at
$35.43. The stock is now trading
ex-dividend for $2.98 of total dividends.
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.
yield for the 10-year treasuries fell six basis points to close at 2.51. The price of a barrel of crude oil fell
twenty-seven cents to close at $92.53.
implied volatility for the S&P-500 (VIX 15.64 +2.37) soared eighteen percent
to close well above its 200-DMA and near its August high. The implied volatility for the
NASDAQ-100 (VXN 18.12 +2.97) soared nineteen percent to close at its highest
level since April.
internals were bearish with decliners leading advancers 5:1 on the NYSE and by
4:1 on the NASDAQ. Down volume led
up volume 11:1 on the NYSE and by 8:1 on the NASDAQ. The index put/call ratio rose +0.21 to
close at 1.00. The equity put/call ratio rose +0.14 to
close at 0.77.
was a wake-up call for complacent bulls.
The buy the dip crowd lost all of Wednesday’s gains and then some. Is this the start of a larger move
lower? That is difficult to
say. With such an extreme one day
move, generally a counter move occurs before the market can continue so we would
be looking for a bounce on Friday.
We will maintain our current positions until we see this play out on
hope you have enjoyed this edition of the McMillan portfolio. You may send comments to firstname.lastname@example.org.