Week of Oct 29th, Dow & Cotton
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Stock Index Corner: Dow Jones Industrial
The daily of Dow Jones is a a few points away from Fib OP target....The daily may correct to first support level of 11737 (not shown).
S&P500:
Big Picture: (monthly): Bullish
Medium term (weekly): Sideways to Bullish
Short term (daily): Sideways to Bearish
Fundamental:
The earnings calendar remains very busy this coming week (Oct 30 to Nov 3) with 83 of the S&P 500 companies due to report, following last week’s peak of 155 companies. Changes for earnings expectations were mixed in the latest week: Q3 (+15.9% vs +13.9), Q4 (+11.4% vs +11.7%), and Q1-2007 (+8.8% unch wk/wk), and Q2 +6.7% vs +6.4%), according to Thomson First Call. Annual earnings expectations are currently at +14.5% for 2006 and +9.7%
for 2007, which would follow 3 consecutive years of double-digit earnings growth (2005 +13.7%, 2004 +20.2%, 2003 +18.4%, vs 25- yr avg of +8.6%).
Major World Indexes
Weekly MACD Histogram (Medium term): FTSE, Nikkei, ASX - UP (Bullish) , do watch closely the influence of S&P500 and the Nasdaq's directions over next several weeks...
Commodity Corner: Cotton Dec
Technical:
The daily Cotton has found an bottom and possibily moving up for the next several days. Next resistance: 52-53
Fundamental:
Dec cotton has rebounded mildly higher in the past week, finally showing some spillover strength from beans and grains. Cotton continues to be depressed by weak export demand
and by hedge pressure from the incoming crop. Cotton prices are weak despite this year’s sharp -13.5% yr/yr drop in the crop size and -17% yr/yr drop in US carry-over. Cotton is 44% harvested, 1 point ahead of the 5-yr avg of 43%.
Trading ideas : (please do your own research and apply your profit/ risk management rules in all trades, please note except options writing, all the other trades may last just several days)
Writing Options: Cotton OTM Puts
Futures: Long Cotton (dec)
Stock Options: CSCO (long puts), Teva (long puts)
posted by "Frank" at Sunday, October 29, 2006
5 Comments:
hi Ren Xin, i based on my trend analysis for teva since i only do short term trades using put options...
if u buy stocks, u need to have longer horizon view...and understand the fundamentals better..perhaps yr comments are correct for longer term view..
thanks for the post...
frank..
hi Ren Xin, i based on my trend analysis for teva since i only do short term trades using put options...
if u buy stocks, u need to have longer horizon view...and understand the fundamentals better..perhaps yr comments are correct for longer term view..
thanks for the post...
frank..
Thanks for your response. Yes, I was thinking of a longer term play.
However I am interested in your perspective.
What is the normal time period for your short term view - 3-5 days or longer? Where do you normally put a stop in a put like TEVA?
I have read up on options trading partiularly the more complex constructs. I believe the concepts are useful but I still have not got my mind around how to trade with them. I find them too complex and hard to determine a position on them. I guess I am just an amateur with too little time.
Thanks again and happy trading.
yes, my put options on Teva play is a short term play a few days to a week...
yes, some of the options strategies are complex, but i usually choose simpler ones to trade...for me i can use this strategy to make money whether the mkt is up or down...
for stocks, u need to make sure it goes up to make money...
frank
Hi,
I do agree that using options significantly increases your leverage but I do think that it requires monitoring of the market very actively. I tried trading a few options but with little success. Now I use it occasionally to hedge against my gains and losses.
I am now using a long/short method. I both long and short the market (with separate stocks) so it is still a value investment perspective. This gives me some leverage on the short side (very low compared to options trading). But the possibility of a longer hold gives me a better chance of success wihtout having to fight the time decay. I would then try to respond to the market and the stock momentum.
I was thinking about trying to break my holdings into two separate portfolio management style - one with a value investment style (long term) and the other with a technical analysis (short term). I am not so sure whether my mind can work that way.
Thanks for your inputs.
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