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Nothing presented is financial advice, trading advice or recommendations. Everything presented is the author's ideas only. The author accepts no liability for its use including errors and omissions. You alone are solely responsible for your own investing and trading. There are considerable risks involved in implementing any investment strategies and losses can be large. Trade at your own risk.

 

Feb 24  / Stocks - Canadian Banks, SPY
STAYING
IN THE GAME

Opinion Piece

It's important to stay aware of trends and decide whether or not the "game" is over or just "half-time". I believe for now the market has called a "time-out", so here is what I am doing now.

Here's what I am doing today. CIBC (CM) announced excellent earnings as did National Bank. The euphoria on the Canadian Banks has returned them to "pre-oil jitters" valuations. This is a prime time to sell covered calls and that's what I am doing this morning with my retirement account. For example on TD I am selling the March $82.00 strike and considering the April $82.00 as well. If I wanted to get taken out for sure, I would sell the $80.00 strike. Yesterday on Canadian Bank positions I sold a number of naked puts in my non-retirement account. Today I am on the other side of the fence selling covered calls. I am not sure TD bank can reach my covered call strikes in this weaker market. I believe the euphoria in the Canadian Bank earnings should keep valuations up for a while longer but how much higher they can move is difficult to tell. I prefer to error and sell covered calls and be taken out and then have the chance to buy back in when the "excitement" ends and sell calls again. As well should any of the big 6 banks report poorer earnings than expected, I would believe the rally will stop almost instantly and be followed by a move back to more realistic valuations. All my Canadian Bank stocks are being traded in Canadian dollars on the TSX.

 On the SPY. Any rise in the S&P 500 over the next day or two I believe is a rally before more selling takes place. I plan to buy puts on any rally. The uptrend is definitely stalled at this level and any bounce higher is more than likely a relief rally and bargain hunters returning. I would expect more selling before we revisit the Feb highs we recently made. Note how I said revisit those highs as I expect this market will recover sometime in late March or April unless oil moves higher. Then it's anyone's guess where we will be heading.

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Disclaimer: There are considerable risks involved in all investment strategies. Trade at your own risk.
Stocks, options and investing are risky and can result in considerable losses. None of the strategies, stocks or information discussed or presented are financial advice, trading advice or recommendations. Fullyinformed.com is a private website. Everything presented and discussed are the author's ideas and opinions only.
By using this site, you agree to be bound by its terms of use. The full terms of use can be read here. If you do not agree to the terms of use, do not use this site. The author of fullyinformed.com assumes no liability for topics and ideas discussed, errors and omissions, ads and their content and external links. Any corporate insignia used are registered trademarks of their respective company or corporation and are being used for identification purposes only. All material copyrighted by FullyInformed.com. Reproduction in whole or in part prohibited. Copyright 2008

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