Stock And Option -Intraday Comments For Oct 09 2012 – SPX, JNJ, MCD, INTC, IWM, FTS, BNS, AAPL

Just a few things to mention in my stock and option Intraday comments. Obviously the market timing technical indicators were “bang on” this morning.

Note sure exactly what the selling this morning means or whether it is just nervousness of earnings, the election, the IMF warnings, Greece again or the fact that on Oct 5 the S& p 500 did not get a confirmation from MACD that the market was going to move higher.

To my way of thinking, the market can only push higher if earnings can support it and as regular readers know I have indicated that for higher valuations earnings must improve by about 15% over last year which I really don’t believe is doable at all.

That said it doesn’t mean the market has to crater but it could wandered with a general bias lower. While the earnings seasons looks not very promising for this quarter and many analysts feel it will be the worst quarter in eleven quarters, we shouldn’t forget that there still are earnings but in 2008, earnings collapsed for many companies in the S&P 500.

Businesses have done very well since the 2008 – 2009 market collapse and a lot of that is thanks to the Federal Reserve that dropped interest rates pretty well to zero. Many companies refinanced mid-term and long-term debt at historic low levels. There is a tremendous amount of cash sitting within the banks of these companies. Unlike 2008, many of them are in great shape.

S&P 500 Chart To Ponder

I thought I would share this chart. On Sept 25 MACD issued a sell signal. This wasn’t too surprising and at that point nothing to be concerned about. However the recovery right up to Oct 5 was not confirmed by MACD which stayed negative throughout. On Oct 5 a second high was made in the S&P 500 but MACD did not confirm the high but remained with the sell signal.

I have marked on the chart the 50 period (day) moving average and as I mentioned in last weeks article on market direction, the S&P was not pushing away from the 50 period moving average at all during the last rally and indeed I indicated that often this is followed by a push down to the 50 day. It will be interesting to see if the S&P breaks the 50 period should selling intensify. October is always such a dramatic month or should I say traumatic month?

S&P 500 Chart showing sell signal

S&P 500 chart showing sell signal on Sept 25 by MACD

Stock and Option – Johnson and Johnson Stock

I had mentioned how the Technicals were overbought in the stock. Today’s Sell notice by Goldman certainly is well-timed on their part. They had worked with Johnson and Johnson with their latest acquisition and made plenty on that deal. This downgrade to sell should provide even more revenue for Goldman. But it has to be mentioned that Johnson and Johnson Stock has under performed the Pharmaceuticals Index through the past 12 months and competition has heated up.

But I still like JNJ Stock so I sold the $67.50 puts for next week’s expiry. I expect the stock should be down to that level by then and I will be rolling those puts into the $65 strike range.

Stock and Option – McDonalds Stock

With all the selling going on Mcdonalds Stock is doing just fine today. My McDonalds Stock Put Selling has been excellent this year and the stock is up another 1% today. As long as this stock stays strong, selling out of the money puts should be just the ticket to keep boosting my portfolio.

Stock and Option – Intel Stock

Intel stock took it on the chin again today with another downgrade and even more analysts warning about upcoming earnings in 2013. With the stock below $22.00 I rolled all my October naked puts further out and reduced the number of put contracts on each roll. I am still holding the Oct $22 naked puts as I want to see if by next week the stock is hanging on at support which is $22.00.

Stock and Option – IWM ETF

For Fullyinformed Members, you can check out today’s trades at www.fullyinformed.com/members and look to the far left column under TRADE ALERTS. IWM is under pressure for the third straight day as the small cap index is always a place investors hate to be in when selling hits the market. That is the problem with small cap stocks.

Stock and Option – Fortis Stock

Fortis Energy on Toronto has been a favorite of mine for decades. I don’t know what prompted the larger than 50 day normal volume today but the stock has hung tough above $32 which is my put strike preference so if the stock can fall back to $32.00 I will be back selling more puts.

Stock and Option – Scotiabank Stock

Scotiabank Stock is finally below $54.00 and I will watching for further erosion in the hopes of selling puts at $52 or even $50.(symbol BNS both TSX and NY)

Stock and Option – APPL Stock

Apple Stock fell further this morning and anyone who read my article last night on trading the extremes would have done well this morning. For Fullyinformed Members you can read about my trade today here.

Intraday Stock and Option Comments Summary

That’s it for today’s Intraday comments. I will be updating a few charts this evening after the market closes. I hope you come back then. Enjoy the rest of your day.