May 282016
 

Flag-largeStocks rallied this week as the market digested the possibility of a rate hike in June or July. Federal Reserve Chairwoman Janet Yellen said Friday, “It’s appropriate, and I’ve said this in the past I think, for the Fed to gradually and cautiously increase our overnight interest rate over time, and probably in the coming months such a move would be appropriate,” if the economy and labor market continue to strengthen. The probability of a June rate hike now stands at 28% compared with just 4% earlier in the month. Also helping stocks jump higher was economic data from the housing sector which indicated that new home sales grew at their fastest pace since January 2008 and pending home sales grew 5.1% over the past month.

The S&P 500 opened Monday at 2052.53 and closed on Friday at 2099.06 up 46.53 or 2.27% for the week.

Chart_052816_SPX

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Jan 302016
 

Faithful blog readers may be wondering why I posted so little this month. Many readers may know that I am also a commercial pilot. I recently was offered the opportunity to assist our local community college in establishing an FAA-approved Part 141 flight school. This has been a monumental task and has commanded virtually all of my free time. As a result, I have had little time to research trades and even less time to write about what trades I have made. I have managed to keep the Portfolio and Trade Results pages updated in nearly real-time. I apologize to my readers for the inability to post more actively. Once things settle down a bit, I hope to get back to weekly posts.

Market Conditions

The market certainly started off 2016 with a blow, but appears to be stabilizing somewhat. Even though we have seen wide swings in the S&P 500, this week did end on a huge positive note with the SPX up 46.88 points on Friday. Market activity this week was driven both by earnings and the central banks. The Federal Reserve released its January statement on Wednesday, leaving the door open to the potential of four rate hikes taking place before the end of 2016. Meanwhile, the Bank of Japan took a step in the opposite direction by announcing the introduction of negative interest rates. The SPX opened Monday at 1,906.28 and closed Friday at the high of the week at 1,940.24, up 33.96 or 1.78% for the week.

Chart_013016_SPX

The chart show strong support at the 1820 level. Despite excursions to these levels twice in 2014 (April and October) as well as earlier in January of this year, the declines have halted at that level. If we are to see a breach of the 1820 level, that would be a strong indication that we are headed into bear market territory.
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Apr 132015
 

Today I entered two new trades, a credit put spread in SPX and an earnings trades in Johnson & Johnson (JNJ). In the Weekend Portfolio Analysis I indicated that I would be looking at several earnings trades this week. JNJ reports earnings before the bell tomorrow morning and offered favorable risk/reward potential.

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Jan 242015
 

As this is the first weekend portfolio review of this blog, it will be a bit lengthy as I review all the positions that have been placed in my account since the beginning of the year.

Market Conditions
It was a strong week for all of the major indices despite the selloff on Friday with lots of two-sided action almost every day. In the end the SPX index opened Tuesday at 2020.76 and closed the abbreviated trading week at 2051.82 for a 1.53% gain. The VIX started the week at 20.07 but continued to revert to the mean through the week ending at 16.66.

Chart_012315_1

March Positions
The RUT and SPX credit spreads below make up the core of my portfolio. These are all extremely high probability, defined-risk trades and should conservatively generate a 2-3% return on capital per month. Continue reading »