- New Trades -


Editor's Note:

(October 06, 2013)

It has been an interesting week for the stock market. It feels like the large cap S&P 500 index has been slowly drifting lower since the post-FOMC meeting peak in mid September. Yet would you believe that the S&P 500 has actually posted gains since the U.S. government shutdown began? It closed at 1681 on September 30th and closed at 1690 on October 4th (Friday). There is still a short-term bearish pattern of lower highs and lower lows and I suspect we will see the S&P 500 dip toward its 100-dma near 1662.

Meanwhile we continue to see relative strength in the NASDAQ composite and the small cap Russell 2000 index. If investors were truly worried about the government shutdown or all of the political turmoil in Washington then the Russell 2000 would likely be underperforming but instead it's outperforming. The strength in these two indices is actually very encouraging. However, I am suggesting we remain cautious until after the debt ceiling issue has been addressed in Washington.

It is the debt ceiling and the alleged risk of a U.S. debt default that could seriously rattle global stock markets. Odds of a true default are virtually zero but that won't stop the politicians from threatening we could see a default as they try and pressure their rivals to compromise.

Thus the next two to three weeks have the potential to be very volatile even though the overall trend for stocks remains bullish. I'm not adding any new trades tonight but we are adding two new candidates to the watch list. Plus, I've updated my radar screen below.

Radar Screen:
Here is a list of stocks on my radar screen. These have potential to be LEAPS trades down the road if the right entry point presents itself:

UNXL, TWX, DDD, CTSH, NOV, CAH, JAH, TIBX, LVLT, CMI, BWA, X, BHI, SLB, UA, HP, BA, URI, ROST, TJX, LTD, FB, SBUX, AKAM, DIS, LVS, LCC, LUV, COP,