Retracements & Other Considerations

We have been highlighting the retracements in the Russell 2000 and IWM since the July high. The Russell 2000 is still below its March high meanwhile the S&P 500 keeps on ripping away.

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Through yesterday’s close the Russell 2000 has now almost moved back above all its retracements from from the May low to the July high which was also the March high. Pay attention to 115.44 which is the 38.2% retracement on IWM.

Merger Activity Up Mid Week

Mergers and acquisitions are fast and furious. This morning Bloomberg has a story that Infineon is looking to acquire a U.S. semiconductor company and that the deal could occur as soon as today.

Infineon

 

Portfolio Update

The S&P 500 rebounded higher since our last update. The Nasdaq Composite rose for a third week in a row. The portfolio is now 84% invested long, 0% short and 16% in cash, net long 84%. We are now at a value of 836.05% from 815.77% since last Tuesday.

It appears a new low is in and now the S&P 500 will challenge 2000.

We have added the price target from the Alpha Intelligence Stock Scorecard into the weekly update. Most stocks are below their price targets. ETFs recommendations can be found in The Madison Letter. In 2014, this will be updated each Friday with Market Crash Indicators.

Remember these returns are total returns with the average change for all winners and losers is 7.46% per idea. Our batting average of closed winners and losers is 70%. The portfolio is up 836.05% through last week from inception when it began at 0% in April of 2008. We began 2013 at a value of 478.60% so we had a very nice gain for 2013 ending at 732.40%. So far this year we are up 103.65 points or 14.15%. The performance on the Uncommon Wisdom Daily Portfolio Tracker is a bit higher due to dividends which they add in. We have never added in dividends so our weekly results are understated.

West Texas Intermediate (WTI) Finds Support While Brent Crude Continues to Fall

The price of West Texas Intermediate (WTI) the crude used by U.S. refiners to produce gasoline hits support while Brent Crude which is used in Europe continues to drop. Brent Crude just hit a 16 month low.

Oil Prices

 

Merger Monday

First there was a bidding war for Hillshire Brands between Tyson and Pilgrim’s Pride. Now we have a bidding war this morning for Family Dollar (FDO). Dollar General (DG) has put in a competitive bid for Family Dollar that trumps the first bidder Dollar Tree (DLTR). Another twist on Merger Monday.

Family Dollar Bid’s

 

The Week Ahead

1.Geopolitical and Fiscal Events. Congress is on recess for the next four weeks and markets should like this vacation from the political nonsense. President Obama continues a two week vacation in Martha’s Vineyard. Friday sees Federal Reserve Chairman Yellen speak.

2.Economic Releases. Releases of note this week other than the weekly chain store sales, oil/gas numbers, mortgage applications and jobless claims include CPI, leading indicators, Philly Fed Survey and existing home sales.

3.Earnings Releases. Notable releases include (in order of day’s reporting with Monday first and Friday last) HTZ URBN HD MDT HPQ LOW CRM INTU FL ANN among others companies as we continue Q1 earnings. See the earnings section.

The Madison Letter: Current Update

We began to offer a buy and sell strategy via our Madison Market Timing Indicator at the beginning of April of 2007. There are now 23 open and closed winning trades to 8 closed losing trades with our market timing results. We closed longs on OIH FXI EEM and IYR for gains four weeks ago. We were left with one long position TRF from our original buys before launching with Uncommon Widsom Daily. This column replaces the Morning Matters on Fridays. We established a new buy that is working well.

madison market timiing

Markets Await Fair Amount of Economic Data

Markets are higher but are awaiting Consumer Confidence at 9:55 a.m. EDT and at 8:30 we get PPI and 9:15 Industrial Production. Today is also August Options Expiration.

PPI

Consumer Confidence

Industrial Production

 

Options Activity

Index ETF Options Volume

We are going to highlight unusual options activity as well going forward. The third column from the left will highlight such outliers. EFA had unusual volume and excess put action. EFA is an ETF tracking Europe and looks like excess bearish bets are being made at the bottom. Options volume continues to come in very light..

oix daily

 The rows in the options matrix are as follows:

  • Curr Vlm = Current Option Volume for today
  • OpVol20 = 20 day Option Volume average
  • % Delta (sorted descending) = Curr Vlm/ OpVol20 * 100
  • Sym = Symbol
  • 20 HV 100HV 252HV = 20 day, 100 Day and 252 Day Historical Volatility
  • Slope = The slope of the historic vol
  • Delta = Change in slope
  • cOptInt = Call Open Interest
  • pOptInt =Put Open Interest
  • cVolum = Call Volume
  • pVolum = Put Volumed

German Economy Shrinks

Europe is suffering as Germany, which is the leading economy, contracted with its latest GDP report.

Germany Struggles