Archive for April, 2011

Intraday Market Notes & Observations – April 15

Friday, April 15th, 2011

2:00pm ET:  Inject your portfolio with a dose of healthcare
Tags: Healthcare ETF, XLV, call debit spread, options

The widely traded Healthcare ETF (XLV) broke a two week consolidation by gapping up 1%. While that’s not particularly earth-shattering, the fact that the stock has risen over 20% since last September is nothing to sneeze at. It’s only three points away from its all-time high of $37 and is looking to make a run at it.

The question now is: How long will it take to get there? Well, it’s taken the stock eight months to gain six points (3/4 of a point per month) so our time horizon should be set for at least four months.

For safety’s sake (and since this is an options play), I’m going to look at the January 2012 calls to generate a 34/37 call debit spread. This means I’ll be buying the January 34 call. now trading at $1.75, and selling the January 37 call, currently going for $0.50. That will give me a cost basis of $1.25 and a potential maximum profit of $1.75 (the difference between the stike prices less the cost of the spread) giving a maximum realizable ROI of 140%.

Note that these options are quite liquid; the open interest (OI) on the 34 call is 2.16k and 31.3k on the 37 call.  The weekly chart of the XLV is shown below along with major support and resistance levels.


1:15pm ET: Intraday support/resistance
SPX 1314/1326
DTX 524.5/530.5
DJIA 12275/12375
Nasdaq 2745/2775
OEX 586.75/591.75
VIX 14.9/16.0
Trin range: 1.0 – 1.4 (neutral)
Average VWAPs: +72/-24 (moderately bullish)

Intraday Market Notes & Observations – April 14

Thursday, April 14th, 2011

1:05pm ET: Intraday support/resistance: SPX 1302.5/1315.5
DTX 520/529
DJIA 12160/12300
Nasdaq 2735/2760
OEX 582.5/588
VIX 16.1/18.1
Trin range: 0.80 – 1.20
Average VWAPs: +74/-33 (mildly bullish)

Outlook: Bottoming tails forming in the major averages (esp. the DJIA) and the fact that the 520 level has been holding are bullish, at least in the short term. The CPI tomorrow could be market moving.

Intraday Market Notes & Observations – April 13

Wednesday, April 13th, 2011

12:23pm ET: Intraday support/resistance
SPX 1309/1315
DTX 521.5/527.5
DJIA 12245/12335
Nasdaq 2745/2775
OEX 586.5/591.5
VIX 16.2/17.2
Trin range: 1.0 -1.6 (if Trin rises into the close, expect a lower open tomorrow)
Average VWAPs; +35/-51 (mildly bearish)

Intraday Market Notes & Observations – April 12

Tuesday, April 12th, 2011

12:45pm ET: Intraday support/resistance:
SPX 1304/1322
DTX 520/527
DJIA 12200/12380
Nasdaq 2730/2760
OEX 585/592
VIX 17.25/18.50
Trin range: 1.0 – 1.3 (rising Trin is bearish)
Average VWAPs: +39/-63 (mildly bearish)

Intraday Market Notes & Observations – April 11

Monday, April 11th, 2011

3:00pm ET: Airline ETF (FAA) hits resistance
Tags: FAA, ETFs, Airlines, Channeling stocks

Airline stocks have been spiraling downward for the last six months as shown by the daily chart of the Airline ETF (FAA) below. You can see that the downward movement has been bounded by price channels with an approximate separation of $3. The price hit the lower bound last Friday and its bottoming tail suggested a rebound.

Today (so far), it appears that the $34 support level will hold. Judging from past rebounds, we can expect the price to rise between $1 and $2 before it rolls over again. If you play options, one way to benefit from this chart pattern is to buy an at-the-money put (at least one to two months out) when the stock begins to rollover from its next high and ride it down the $3 to the projected lower channel support.

1:00pm ET: Intraday support/resistance:
SPX 1323/1334
DTX 519/524
DJIA 12360/12440
Nasdaq 2762/2793
OEX 592/597
VIX 16.25/17.25
Trin Range: 0.75 – 1.00 (neutral)
Average VWAPs: +27/-83 (moderately bearish)

Intraday Market Notes & Observations – April 8

Friday, April 8th, 2011

12:56pm ET: Intraday support/resistance
SPX 1329.5/1339.5
DTX 521.5/532.5
DJIA 12370/12450
Nasdaq 2786.5/2808.5
OEX 594.5/598.5
VIX 16.5/17.4
Trin range: 0.60 – 1.05 (neutral)
Average VWAPs: +41/-58 (neutral to bearish)

Intraday Market Notes & Observations – April 7

Thursday, April 7th, 2011

3:10pm ET: Subscriber database updated
Two new earnings upgrades added

10:15pm ET: Intraday support/resistanceSPX 1327/1339
DTX 530/537
DJIA 12330/12450
Nasdaq 2782.5/2813.5
OEX 593/598
VIX 16.5/17.8
Trin range: 0.7 – 1.0 (bullish to neutral)
Average VWAPs: +46/-41 (neutral)

Intraday Market Notes & Observations – April 6

Wednesday, April 6th, 2011

1:15pm ET: Intraday support/resistance:
SPX 1329.5/1339.5
DTX 529/538
DJIA 12390/12450
Nasdaq 2785/2815
OEX 545.5/598
VIX 16.6/17.3
Average VWAPs: +30/-126 (bearish but not as bad as earlier)
Trin range: 0.5 – 0.9 (bullish)

Intraday Market Notes & Observations – April 5

Tuesday, April 5th, 2011

1:20pm ET:  Intraday support/resistance
SPX 1330/1340
DTX 535.540
DJIA 12350/12450
Nasdaq 2785/2813
OEX 594/598.5
VIX 16.35/17.85
Average VWAPs: +87/-24 (fairly bullish)
Trin range: 0.40 – 0.80 (bullish)

Rare earth miners breaking out

Monday, April 4th, 2011

Two of the more prominent rare earth miners are breaking out to new highs. We alerted subscribers on Friday that Avalon Rare Metals (AVL) broke out, and today Molycorp (MCP) is joining the club.

No doubt these stocks having been getting a bit of a boost from recent CNBC coverage, but the fact that these metals are seen to be in short supply, especially considering that China is curtailing exports, is the dominant reason. Both companies operate in North America which is why they’re garnering so much attention.

The companies explore and develop lanthanide metals (a row on the periodic table) that are critical to many clean energy technologies. The name “Molycorp” appears to be a misnomer as the company doesn’t explore or develop molybedenum (at least according to its website). For a pure play in molybenum itself, check out General Moly (GMO) whose stock is also getting a boost today.

Below are the daily charts of all the above mentioned companies provided for comparison.

Stock stats:
Analysts covering this industry give $74 as the mean price target for Molycorp (currently near $66) and $6.70 for GMO (now at $5.70).  (No price target was cited for AVL.)
Next earnings report:
MCP: 5/10/11 after the bell
AVL:  4/14/11
GMO:  5/2/11-5/12/11