At the time of writitng this intraday outlook the market direction has turned from selling back to buying and the S&P 500 has pushed to another new all-time high at 1776.25. While European stocks were weak following news that inflation has picked up in Britain and the economy definitely appears to be on the mend, it was the news from Macys that really got stocks from selling off. Earnings and revenue improved at Macys but it was their outlook for a solid Christmas season that had investors back buying.
With stocks off at the outset buyers jumped in an bought many of the stocks that had pulled back this morning and many that had pulled back over the past two days. On the NASDAQ for instance, analysts indicate that a full one third of all stocks appear to be in a correction mode of around 10%.
This type of rotating correction we have seen before. This is where stocks within sectors correct while the rest of the market either holds gains or actually moves higher. Over a period of days and weeks those stocks that are correcting eventually join back in the rally.
Whether this is the actual case, I am not convinced. Instead I still believe the amount of window dressing that fund managers are engaged in at this time of year is enough to keep many stocks and therefore the indexes from slipping by very much.
Market Direction Outlook Intraday – 1 Minute Time Chart
The S&P 1 minute chart below shows today’s market direction action. I have marked the key components in the chart.
A. The open saw a drop which held.
B. A rally back did not meet with much selling and stopped above the opening so it made a new high for the day.
C. The little selling in the morning was easily contained.
D. The market then rallied hard to push to a brand new high.
E. I don’t think the new high will hold but I am anticipating the S&P will pull back to the gap from yesterday around 1771 into the close.
Lululemon Stock – Early Christmas Gift
This year I have had two spec stocks that I rotate between. For much of the year it was Facebook Stock but when it took off I turned to Lululemon Stock (LULU). Volatility has been wonderful in Lulu Stock making Put Selling out of the money highly profitable. As long as I sell at or below support levels I feel confident with Lulu stock.
This morning the stock got an early Christmas gift as JP Morgan rated it as overweight and put an $80 valuation on the stock. Lulu stock had been selling back lower as of late so this got the stock turned right around yet again. I do believe the stock will hold above $65 for the next couple of weeks at least, following this overweight news from JP Morgan. Nice gift as the put premiums are exceptionally fat.
Lulu Stock Put Premiums Dec 21 2013 Expiry
For Dec 21 expiry put premiums are still excellent. Even the $57.50 is at .43 cents. The $60 put strike is over 1% still and my put strikes at $62.50 are bringing in 1.9%. As a speculative stock I don’t have much capital at risk, but so far this year between Facebook Stock and now Lululemon Stock my returns have been exceptional and well over 24%.
Market Direction Into The Close for November 13
Overall the market direction into the close looks stronger than I had anticipated. The sell signal confirmation yesterday by MACD on the S&P was weak and today shows part of the reason why. The continual buying on dips by fund managers keeps the market direction afloat. While I don’t think the S&P 500 will hold the highs for today, I do think we will close back in the green on the S&P and perhaps slightly in the red for the Dow. After the close I will look once again at the market direction technical tools to see what they are telling us about today’s market direction action and what we could expect for Thursday.
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