Dwight's Picks: June 2013

Saturday, June 29, 2013

S&P 500 Index (28 Jun 13): SPY $160.42

Stocks ended on a mixed note on the final trading day of June and the second quarter of 2013. June turned out to be an extremely volatile month for equities as concerns over the longevity of the Federal Reserve’s bond buying program sparked a sell-off in risk assets. However, stocks recovered in the final week of the month. For the quarter, all three major indexes ended higher.

Volatility Index (28 Jun 13): $VIX 16.86

The market is rising, but not as quickly as the VIX is diving. And that could be great news for the month ahead. The move in the VIX might be telling us a bit more than how many days are in the next month. It might be signaling that the market is gearing up for a whoosh higher. So what does it tell me that the VIX fell 25 percent off of a 3.4 percent rise in the market? It indicates that some traders are dipping their toes in the market by selling out their insurance (held in the form of puts).

Long Call (28 Jun 13): HD $77.47

HD $77.47
Buy (2) Jan 14 85 C @ $2.19
Target Price (30%): $2.85

Long Call (28 Jun 13): CSCO $24.33

CSCO $24.33
Buy (4) Jan 14 25 C @ $1.34
Target Price (30%): $1.75

Long Call (28 Jun 13): BA $102.44

BA $102.44
Buy (2) Jan 14 115 C @ $2.43
Target Price (30%): $3.20

Long Call (28 Jun 13): HPQ $24.80

HPQ $24.80
Buy (2) Jan 14 25 C @ $2.49
Target Price (30%): $3.25

Long Call (28 Jun 13): UNH $65.48

UNH $65.48
Buy (2) Jan 14 70 C @ $2.76
Target Price (30%): $3.60

Sunday, June 23, 2013

S&P 500 Index (21 Jun 13): SPY $159.07

Stocks fluctuated between gains and losses before finishing on a mixed note in a volatile trading session on Friday. Market sentiment, however, remains weighed down amid concerns over the Federal Reserve’s bond buying program. All three major indexes finished sharply lower for the week.

The Dow Jones ended the day 0.28% higher at 14,799.40, the S&P 500 ended the day 0.27% higher at 1,592.43, and the Nasdaq ended the day 0.22% lower at 3,357.25. For the week, the Dow Jones fell 1.80%, the S&P 500 fell 2.10%, and the Nasdaq fell 1.94%.

Volatility Index (21 Jun 13): $VIX 18.90

The CBOE’s Volatility Index, known as the VIX, closed above 20 Thursday for the first time this year, a move that coincided with the S&P 500′s biggest back-to-back decline since 2011. The VIX has since pulled back, recently down 9.4% to 18.56.

The VIX typically moves inversely to stocks, with that correlation stronger when stocks fall, because a drop in stocks usually sparks buying of options looking to protect against–or profit from–heightened price swings. The index is calculated from the prices investors are willing to pay for options tied to the S&P 500.

Long Put (21 Jun 13): SPY $159.07

SPY $159.07
Buy (2) Jan 14 134 P @ $2.55
Target Price (30%): $3.35

Long Call (21 Jun 13): VXX $21.56

VXX $21.56
Buy (2) Jan 14 35 C @ $2.15
Target Price (30%): $2.80

Sunday, June 16, 2013

S&P 500 Index (14 Jun 13): SPY $163.18

Stocks ended lower in trading on Friday amid ongoing concerns over the Federal Reserve’s bond buying program. Stocks also struggled as investors digested some mixed economic data. All three major indexes also fell for the week. The Dow Jones ended the day 0.70% lower at 15,070.18, the S&P 500 ended the day 0.59% lower at 1,626.73, and the Nasdaq ended the day 0.63% lower at 3,423.56.

Volatility Index (14 Jun 13): VIX 17.15

It was a textbook week for the VIX as far as reactions to action in the stock market. The S&P 500 was down just over 1% on the week and VIX climbed over 13%. As a general guideline, the market dips should not be bought unless the VIX drops back under the 200-day moving average at 15.32.

Long Call (14 Jan 13): BA $101.83

BA $101.83
Buy (2) Jan 14 115 C @ $2.49
Target Price (30%): $3.25

Long Call (14 Jun 13): HPQ $24.74

HPQ $24.74
Buy (2) Jan 14 25 C @ $2.59
Target Price (30%): $3.40

Long Call (14 Jun 13): CSCO $24.92

INTC $24.92
Buy (3) Jan 14 25 C @ $1.64
Target Price (30%): $2.15

Long Call (14 Jun 13): CSCO $24.09

CSCO $24.09
Buy (4) Jan 14 25 C @ $1.32
Target Price (30%): $1.75

Long Call (14 Jun 13): UNH $63.80

UNH $63.80

Buy (2) Jan 14 70 C @ $2.31

Target Price (30%): $3.00

Friday, June 7, 2013

Market Trend (7 Jun 13): SPY $164.80

Stocks surged in trading on Friday following the release of May nonfarm payrolls data. The U.S. economy added 175,000 jobs in May. The jobs data suggests that while the labor market is recovering, the recovery is not strong enough for the Federal Reserve to start easing its $85 billion a month bond buying program anytime soon.