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While my indicators are giving bearish-to-neutral readings, the market continues to set new all-time highs, and we do not want to buck the tape. We also do not want to buck the Fed. I do feel that the fundamentals of the market are weak, but because I don’t think the Fed is going to increase interest rates, I would be bullish at this point and buy calls on any pullback.
Technically, the market broke above a huge amount of overhead resistance back in July, although the rally has somewhat stalled for about the last two weeks. However, it now seems to be resuming its move higher, so I would say that the market is going to move up further from here.
Turning to earnings, the numbers coming out of most companies are good. Of course, analysts expected them to be really low and, therefore, they’re beating estimates, which is the key in this market. I will say that the retail market is better than I thought it would be, and it looks like the consumer’s coming back a little bit.
With that in mind, today I’m recommending a bullish trade on Avon Products, Inc. (NYSE:AVP):
Buy to open the AVP Oct 5 Calls (AVP161021C00005000) at $0.60 or lower.
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