UPB Morning Market Video - $TSLA $SPY $GOOG $AMZN $TLT $USO $AAPL $NFLX
The Euro Crisis, The Flash Crash, The U.S. Debt Downgrade, The Fiscal Cliff, The Sequester, Cyprus. What do all of these media spectacles have in common over the last 5 years? They were all fabulous buying opportunities for stocks. In each case, stocks plunged initially as traders were scared enough to sell, only to recover and rally. If we've learned anything since the financial crisis in 2008, its that any sell-off should be bought. With zero interest rate policy set to remain in effect for years to come, a mere $10 billion reduction per month of asset purchases by the FED TBA next month aka the terrible taper, and central banks globally printing money, stocks remain the place to be going forward.
The most recent sell-off is being blamed on the conflict in Syria. The media enjoys pegging declines in stocks to something tangible. Stocks got a little ahead of themselves. This was a very healthy pull back. Also consider that this pull back started in a month where almost everyone is on vacation. Stocks are seeing very little volume, and I think it was a matter of running out of buyers and they will start coming back. The Syria sell-off will be just another name, another excuse for people to sell, but more importantly it will be a chance to buy the dip.
Add Syria to the list of excuses to sell. In two months from now when stocks have hit new all time highs, we can expect another headline to pop up, scare the bulls, and embolden the bears. At some point in the future we will see that final pull back. When? I do not know right now. With all the names that get tossed about when stocks fall, wouldn't it be ironic when stocks crumble again like they did in 2008 and 2000, that the next massive sell-off remains nameless. "Stocks fall for absolutely no reason other than traders are selling". That would be the pull back that I will be scared of. A nameless pull back. The headless crash.
"Frank what are you hearing about this sell off? Why are people selling?"
"Anne I have no idea. Just selling across the board for absolutely no reason"
That is when I get worried. These named pull backs have been a boon for the bulls and this Syria pull back will be no different. The trend is up. Stocks will recover and we will close the year out much higher than we are right now.
Here are some articles I have written in the past about the market.... enjoy:
With $USO breaking out higher like I thought it would, where is the top? Where does this rally stop?
I wrote about the looming $USO spike here: https://www.optionmillionaires.com/2013/uso-oil-spike-coming/
The calls I highlighted there are up over 300%.
I think this rally has two possible points of interest to the upside and I think it will, in all likelihood, not get past the first. $USO at higher prices is not good for the consumer, it is not good for the economy, and with rates rising, I can't see oil going much further to the upside without severe consequences for the economy.
Here are two charts I put together. The first chart is from earlier this week and illustrates where I saw $USO headed short term. The next chart represents where I see support and resistance going forward. The dotted line is where I expect the rally for $USO to stop and the solid line is where $USO will head if all the stars align perfectly.
A war in the Middle East will spur panic buying. When that subsides $USO will be below where it trades today. But for now it offers a great opportunity.
I covered Campbells Soup Company Sunday night in the optionmillionaires.com week ahead live webinar. The video archive for the webinar can be found here: https://www.optionmillionaires.com/forum/showthread.php/526-The-Week-Ahead-8-25-13 In it I stated that I thought $CPB was headed for a decline and I was looking to enter the out of the money PUT options. Since then the stock has fallen almost 5%. I think it may fall even further and that tomorrows earnings report will be the reason why. The stock is up some 40% since the start of 2013. Are there that many Cream of Mushroom cans flying off the shelves this year? The stock offers a nice 2.5% dividend yield, but as rates rise that will become a moot point.
I also recorded this chart video Monday before the market opened: http://stks.co/tQ43
Here are some charts of $CPB. The stock has put in a double top. The recent volume indicates it is running out of buyers. Any selling pressure will send the stock to support at the $42 level before coming to rest in the mid $30 level.
The PUT options for September are up over 100% since I brought the stock up at Sundays week ahead webinar. I will either enter into PUTS heading into the close today, or wait until the market opens tomorrow. The stock is down almost 5% since week alone, which is a big move for a stock like $CPB. I think the stock will see further declines into weeks end and beyond. It's a bold call and one I could be wrong about. I've been right for almost 5% this week, I think there are more profits to come for those trading for downside.