At the end of the day stock markets brought in a mixed performance. The NASDAQ was the worst but then that’s the problem with Indexes when they are overweight certain stocks. Apple Stock had a rough day, down at one point to $661.20.
Johnson and Johnson Stock
I have kept an eye on Johnson and Johnson Stock. Volume was poor today and MACD is indicating the stock may turn down. The Fast Stochastic is negative for the second day as the stock comes off an overbought condition. I am hoping for a couple of good down days so I can go back to sell the $67.50 puts. Overall JNJ stock really should be trading around $67.50 to be in fair value. Back on September 21 there were a lot of buyers and very good volume again on the buy side. It is nice to know that lots of investors can be wrong when buying into a stock. On September 21 a lot of buyers obviously thought the stock was going to head higher. This is a stock worth watching for a Put Selling trade. The chart below is typical of what I study at the end of a day. It takes only minutes and tells me whether I should be getting ready for an opportunity.
MICROSOFT STOCK – Wait for it
For example below is today’s Microsoft stock. It fell all the way to $30.04 before closing at $30.17 down .74% for the day. I sold a handful of January 2013 $27 puts which I will write about this evening. This is just the start of a position I will be continuing to build in Microsoft stock through put selling. I hold quite a few naked puts already. You can see the difference in the charts between Microsoft Stock and Johnson and Johnson Stock.
Microsoft stock is either going to fall below the Bollinger band to move lower or bounce sideways. The thing to watch for with this chart is volume. Look at how the selling has been steady in Microsoft Stock for the past three sessions. The big up move on Sept 20 was met with more selling than buying. This is obviously not a good sign for any stock and despite the other indicators being oversold, anyone who does not want to own this stock should be waiting for it to bottom and move up before put selling. Again you can see what I look for when you compare these two charts. More of that later this evening.
SPY PUT Trades
Today was excellent and I will write a short article about it as well. I did 4 Spy Put Trades. 2 were good, one was excellent and one was a break-even. It is rare when I can do more than two SPY PUT trades in a day. Today then was extra special! Those who followed me on twitter should have been able to follow along. I posted more on twitter today than I have in the past month I think. I don’t know if I can do that every day!
Price Of Oil and XOM Stock
Analysts continue to seem surprised by the decline in the price of oil. Personally I felt the run up in oil prices was way overdone and the oil commodity market seemed very overbought. I believe there is more downside and I am watching XOM Stock which is sitting close to its 52 week high. This to me is nonsense for XOM Stock and I waiting for it to be below $90 to start put selling the stock again.
Stock and Option Summary At The Close
Overall it was an exciting day for my spy put trades and I enjoyed the see-saw action of the market. I will update my market direction outlook this evening. Stocks on the radar for tomorrow continue to be Microsoft Stock, Intel Stock and BMO Stock.