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My indicators continue to give bullish readings, although I remain bearish over the longer-term. Today is the last trading day before the Easter holiday and, historically, it has been an up-day for the market. In fact, the stock market rises significantly about two-thirds of the time ahead of the Good Friday market holiday.
Marginal gains could be in store over the near term, but I think the odds are that the market will move lower from here. I will say, however, it was impressive that the market didn’t fall apart Tuesday after the tragic news of the bombings in Brussels. That suggests that there’s still some buying power, but I think the S&P is capped at the 2,050 level where there’s a huge amount of overhead resistance.
The stock market will likely stay within a consolidation range and move sideways for a while before the next major market move, although we did see a fairly large decline on Wednesday. Part of the reason for yesterday’s drop was that the price of WTI crude oil fell back below $40 per barrel, and that took the market down as well.
While the huge inventory build reported by the Energy Information Administration (EIA) Thursday sparked the decline in crude, strength in the U.S. dollar has also contributed to weakness in commodity prices recently. Gold got hit and dropped about $24 because of the inflation fears Wednesday. However, I would still stay that gold is probably still a good asset to own, especially when we see these sharp dips. Silver is also a good place to park some money right now.
Turning our attention overseas, I still think that world markets are not doing well. Despite its flaws, the U.S. markets are actually the strongest in the world right now. In China, the Shanghai Stock Exchange Composite Index has staged a pretty significant rally lately. But, looking at the bigger picture, the index has almost been cut in half this year, so you can see why it might have a little bit of a snapback rally.
In Europe, it was reported yesterday that
My indicators continue to give bullish readings, although I remain bearish over the longer-term. Today is the last trading day before the Easter holiday and, historically, it has been an up-day for the market. In fact, the market rises significantly about two-thirds of the time ahead of the Good Friday market holiday.
Marginal gains could be in store over the near term, but I think the odds are that the market will move lower from here. I will say, however, it was impressive that the market didn’t fall apart Tuesday after the tragic news of the bombings in Brussels. That suggests that there’s still some buying power, but I think the S&P is capped at the 2,050 level where there’s a huge amount of overhead resistance.
The stock market will likely stay within a consolidation range and move sideways for a while before the next major market move, although we did see a fairly large decline on Wednesday. Part of the reason for yesterday’s drop was that the price of WTI crude oil fell back below $40 per barrel, and that took the market down as well.
While the huge inventory build reported by the Energy Information Administration (EIA) yesterday sparked the decline in crude, strength in the U.S. dollar has also contributed to weakness in commodity prices recently. Gold got hit and dropped about $24 because of the inflation fears Wednesday. However, I would still stay that gold is probably still a good asset to own, especially when we see these sharp dips. Silver is also a good place to park some money right now.
Turning our attention overseas, I still think that world markets are not doing well. Despite its flaws, the U.S. markets are actually the strongest in the world right now. In China, the Shanghai Stock Exchange Composite Index has staged a pretty significant rally lately. But, looking at the bigger picture, the index has almost been cut in half this year, so you can see why it might have a little bit of a snapback rally.
In Europe, it was reported yesterday that Credit Suisse Group AG (ADR) (NYSE:CS), Switzerland’s second-largest bank, expects a 40%-45% drop in revenue for the first quarter due to losses on illiquid assets and will cut an additional 2,000 jobs to save money. Deutsche Bank AG (USA) (NYSE:DB) isn’t faring much better, as it is also struggling with writedowns, litigation issues and restructuring costs. Both stocks have lost more than 40% of their value over the last year. As I’ve said before, European banks are likely on the path to disappearing unless their respective governments step in to assist them.
So, I would say we’re in a very dangerous economic environment. I’ve been saying this for a while, of course, but I really do believe it. As a general idea, long-term investors will want to be really defensive here. If you can get any kind of dividend on something that is pretty secure, that’s likely going to be a good deal because I don’t think rates are going to go up very much from current levels, so I would be latching onto those kind of situations.
In the meantime, I’ll continue to weight my positions toward the defensive side. My analysis has uncovered a telecom with a pallid chart. QUALCOMM, Inc. (NASDAQ:QCOM) looks ready to succumb to further market weakeness, and I have a near-term put option to play it.
Buy to open the QCOM)May 49 Puts (QCOM160520P00049000) at $1.50 or lower. After entry, take profits if the stock price hits $47.30 or the option price hits $3.20. Exit if the stock price closes above $52.80.
You have a three-day window to enter the trade, so that would be Thursday’s session, Monday’s session and Tuesday’s session with the stock market holiday on Friday.
My recommendation for option buys in Power Options Weekly is to be in and out within three weeks. So, if these QCOM puts don’t hit either their stop or their target within three weeks of entry, exit at the market price, as the expected drop becomes less likely to happen.
And, again, U.S. markets are closed Friday, March 25, to observe the Good Friday holiday. We’ll return Monday, March 28, with the next Trade of the Day.
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Trester has been trading options since the first exchanges opened in 1973 with a winning streak that goes back to 1984 with money-doubling average annual profits since 1990. To receive further updates on this trade as well as an alert when it’s time to take profits, try Power Options Weekly today and receive 4 weeks for the price of 1 for only $19.95.
