I spent the weekend looking at charts, getting ready for the barrage of earnings reports coming this week. I see a lot of charts that are broken, perhaps a massive rally from the market will change all of that.
Yesterday I entered KO $43 puts at $.46, a trade I posted in the private twitter account and in the chat room. Today those puts are worth over $2.50. It was a nice trade, but I can't say the same yet for some of my other positions. Buying puts? What the heck was I thinking?
Earnings sucked for Coke, as did earnings for Lockheed Martin (-4%), IBM (-8%), and Chipotle Mexican Grill. Coke and IBM are two of the largest companies in the world. Last week Wal Mart said their earnings were going to suck as well. That's 3 of the top companies in the world telling you earnings suck.
These days earnings matter for about 5 minutes. Over the last 5 years the majority of the time where I see a chart broken the market tells me its not. Earnings suck? Just buy something else. Stocks remain the only game in town. But as the last few weeks have shown us, stocks can and will fall on occasion. OK you got me Mr. Market.
Mr. Market had a great pull back, and it even sobered up a slobbering bull like me enough to actually buy puts. What the heck was I thinking? Imagine me.... buying puts?
$NUS looked broken earlier this year at $140, that trade worked out. But my current perspective on the market is not looking so good.
I still see failed support all over the place, charts that are broken. While the $KO chart worked out great, if we've learned anything the last five years, its that charts are no match for infinite central bank manipulation.
The ECB is rumored to be buyers of corporate bonds in the future. As I've stated many times in the past, the Central Banks are backed into a corner. Instead of trading based upon charts, buying or selling based upon central banks actions is a lot more reliable.... I just wish I had the information as early as everyone else.
As quickly as last weeks selling stopped, this week the buying seems fast and furious. Perhaps it will push us back over former support levels and make the charts work again.
Until then I will remain cautious about the overall market and a buyer of options ahead of earnings trades. We've seen some nasty numbers coming out, and while this may not affect the over all market, it will drag these stocks down.