Equity Markets Continue To Be Propped Up



As the chart shows below we definitely have gone below the September lows we printed last month and this normally means that an intermediate cycle has begun. However the recovery that we have had over the past few weeks signals to me that equity markets continue to be propped up and will probably continue like this until we have the elections.

Therefore we sold our profitable equity positions in our portfolio today. The only way I would play this market at present would be to play some really strong stocks with competitive advantages that are currently way oversold. Two stocks that spring to mind would be Gilead sciences (NYSE:GILD) and Disney (NYSE:DIS). Both have earnings coming up shortly..

The former has been on a serious downward spiral since June of last year but we may have a swing low in place so the bottom could be in. With an earnings multiple of just over 6, I see limited downside risk in the stock. Eventually its HCV sales will bottom out and I like the look of its pipeline especially in NASH. Selling puts in here when the company announces earnings shortly should be fine as long as one can hold the stock long term (and collect the dividends along the way) if stock is put to you..

Disney has been crucified by the market due to the declining numbers in its ESPN network. However this stock is more than the media networks. Its studios division and parks have been growing meaningfully. I believe the market has this stock too oversold at present. Again selling puts or put spreads in here when IV is high should prove successful trades.

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General Electric Will Grind Higher Over The Long Term



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Gilead’s Earnings May Provide A Final Opportunity To Get Long

Gilead (NASDAQ:GILD) has earnings coming up in 10 days time and it may provide a nice opportunity for bulls to pick up some more shares. If you are a DRIP investor that likes to invest dividends back into oversold stocks, then use earnings to wither pick up some cheap stock or collect more premium. The current IV rank in Gilead is 85% (it will go higher) which means you could sell a $73-$70 put spread (Nov 4th Expiration – 3 days after earnings) for $0.85 per contract at present.

I’ve been trying to pick a bottom in this stock for a while now as I like its financials and current cheap valuation.


Sentiment is at its lowest point all year and the advantage bulls have now is that the stock is trading with a 6.5 earnings multiple.


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American Express Crushes Its Earnings

American Express (NYSE:AXP) crushed it today with its earnings. It will be interesting to see if the breakout above the $66 level can hold. The charts below of the S&P500 (NYSE:SPX) and the Robo Ratio illustrate that although we are long overdue a trip down into an intermediate cycle low, we don’t seem to be ready just yet… Therefore I believe AMEX will take out $70 a share before this intermediate cycle tops..

oct20-03 oct20-04 oct20-05

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Has Gold Formed An Intermediate Bottom?


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Can Crude Keep Rallying?


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Equities Get Rescued…….. Again……….


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