Covering High return Balanced Investing Strategies To
Make Money In Up Or Down Markets
A Publication of Princeton Research, Inc. (www.PrincetonResearch.com)
Contributing Staff: Michael King, Charles Moskowitz
July 31, 2016
Charles Moskowitz Discussion
Week 30 was a minor profit of only $50, bringing our YTD gains to $7,187. We have only 3 open positions including a bull spread in HL. Funds in use are only $1,009.
As noted here and in my daily updates I have become more bullish, while still expecting a tradable pullback into the support. Technically, the longer the market consolidates above its breakout to new highs, the more likely the move continues. The problem here is that there is another school of thought that says, “Flat tops bring drops.” And for 10 of the last 12 days we have had a pattern of up today down tomorrow with internals also alternating day by day. Also, there are more than a few big names that look tentative at best. I know that after the July run-up some sideways movement is in order, but there were some spectacular moves up on earnings. However, many of them petered out and closed midrange. Some of the biggest names and dividend payers are dramatically overbought and the trades are very crowded.
The Sunday morning shows all seem to be leaning in favor of Hillary, and the most often used expression is “a continuation of the status quo,” and while the market loves the “evil you know vs. the one you don’t know,” I believe it spells deep trouble for both economic growth and the move toward even more public entitlement. Trump is Trump and without hearing anything substantive about his actual plans it’s hard to see a reason to go along for a ride on that train. Unless he starts to do some explaining, it won’t be as close as the polls show it now.
The A.A.I.I. numbers continue to point to no specific direction. The bull is still 20 under average and bears just a hair under average, while neutral is 34% over average. Clearly it is summer and nobody really wants to do much of anything. As Mike points out later in the letter, the consumer has stepped back into the checkout lines and spending increased. Also of note was the decline in inventories, which I personally consider a bright spot. The last thing I would care to see is write-offs of unsold goods on top of declining top line growth.
Remembering that the next two months tend to be well into the sub-par performance category for the market and we are overbought, there will still be trades to be made. Keeping that in mind, I will look for some of the laggards that can move while using close stops. The trade in FAST is an excellent example with a purchase price of $42.15 and a stop less than 2% below.
Have a good week and be careful out there…CAM
All trades were based on your participation in the texting service to receive updates.
New trades $ 10,000 account...In Texting we have a limited amount of words. In the interest of brevity: OPTIONS ONLY: 1 January , 2 February. The Quantity and Strike Price for each trade is specific. Trading is hypothetical. For questions please call 702 650 3000.
3rd Week expiration When the month is listed without a date
New Trades Options Account:
( 1 ) Buy 6 WTW August 12 Calls @ $ 0.75
( 2 ) Buy 6 QQQ August 114 Puts @ $ 0.67
NEW Trades $ 100,000 account :
( 1 ) Buy 12 WTW August 12 Calls @ $ 0.75
( 2 ) Buy 12 QQQ August 114 Puts @ $ 0.67
( 3 ) Sell 5 DB October $ 13 Puts @ $ 1.35
( 4 ) Buy 50 PRGO @ MKT on Opening
( place stop loss at $ 89.89 )
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