- New Trades -
(October 19, 2014)
The S&P 500 just delivered its fourth weekly decline in a row. It has been the worst four-week performance in years. Stocks experienced a short-term panic and the volatility index (VIX) soared to levels not seen since 2011 with a spike above 30.
Currently the markets appear to be seeing an oversold bounce. The problem is we do not know yet if this is just a bounce or if the correction is over. The S&P 500 did come close to a -10% correction on an intraday basis. The NASDAQ composite tagged a -10% pullback from its recent intraday highs to intraday lows.
Has this satisfied the market's need for a pullback or is there more weakness ahead? The answer might be found in corporate earnings.
The next couple of weeks will see a virtual flood of quarterly earnings reports. Their results and guidance for the fourth quarter and into 2015 will do a lot to set the tone of the market.
Seasonally a volatile October tends to portend a bullish market performance in November and December but we all know that seasonal patterns are not guaranteed.
I would hesitate to launch new positions. Be patient and wait for the right entry point. Don't be afraid to miss the bottom since trying to catch a falling knife tends to end up with injuries.
We are not adding any new trades tonight. We have added FDX and HUM as new watch list candidates. The list of symbols on my radar screen below look interesting since many are testing or have tested what looks like potential support. I'd like to see some follow through on the rebound over the next couple of weeks.
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. In no particular order:
DECK, GPC, CSX, CLVS, FB, TWTR, SHW, WLK, SAIA, WCN, SBAC, GILD, LSTR, SNDK, C, MA, CELG, HBI, LMT, NKE, VFC, Z, KO, CCI