Russell’s Round-Up – Weekend Review

Saturday night I was invited to address a group of leaders of Investor’s Business Daily Meetup Groups in Schaumburg. What was to be a 15 minutes speech turned into over an hour of great discussion about trading stocks and options. I have always heard great things about the IBD Meetup Groups and everything I had heard turned out to be true. Check out – ibd.meetup.com – there’s probably a group close to you.

Barron’s –

The cover story addresses the sailing of QE2 and implications to the overall stock market after the program ends on June 30. What is truly interesting in the article is a depiction of what various markets have done during QE1, between the two programs and during QE2. The S&P 500 was up 20.7% during QE1, when no program was in place the market lost 9.0% and then during QE2 the market gained 23.3% (as of Friday). What happens post QE2 will be a fun thing to watch, debate, and discuss. Oh yea, trading it as well is a possibility.

Steven Sears’ Striking Price column discussed everyone’s favorite financial stock Goldman Sachs. Relating market activity, he noted the option activity appears to be split 50 – 50 on bullish vs. bearish. I guess that’s what makes a market. It’ll be interesting to see who wins.

Options Action –

The guys started off discussing earnings, or specifically early earnings announcements which would come in the form of earnings warnings that may come before the end of the June quarter. Also, the fact that the VIX and S&P 500 both traded down on Friday was noted. This continues to be a new emerging pattern on Fridays where the market has dropped. The result is normally a rebound over the next couple of trading days, we’ll see if this occurs again over the next couple of days.

The first stock discussed was Texas Instruments (TXN). This company has a mid-quarter update on Wednesday that is a quick overview of how the quarter may be shaping up. The TXN update could be bearish and the recommendation was to buy a July put in front of the conference call this week. Negative news from TXN could influence other chip stocks, technology stocks, and the overall market. This may be a day to keep an eye on this week.

The next stock discussed was Disney (DIS). This is actually a bullish recommendation stating the stock may be prepared to break out to the upside. Judging by the princess stuff that surrounds me at home, this bullish call may make sense. The trading recommendation was to buy the July 41 strike call with the intention of benefitting from a short term bullish move.