- New Trades -
(January 17, 2016)
The worldwide sell-off in stocks continued last week. Europe is now in bear-market territory (-20% or more from its highs). The Chinese market is now in bear-market territory. The big cap U.S. indices are in correction territory (-10% or more). The small cap Russell 2000 index is in bear-market territory.
In last week's market wrap I noted how the "average" stock was in a bear-market. The selling only accelerated last week. The market might be oversold enough that it could see a bounce in the week ahead. However, I would be wary of trusting the rebound. Q4 earnings season is about to pick up speed. We need to see how the investors are going to react to corporate results and guidance. This could set the tone for the market for the next several weeks.
No new trades tonight. Last week we had three watch list candidates graduate to active trades. Tonight I am adding M as a new watch list candidate. Plus, I have updated my 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. In no particular order:
SKX: Shares look interesting with a show of relative strength on Friday. The stock did not breakdown below its November lows.
WMT: The rally in early January broke through significant resistance. If shares can bounce from current levels we could see a bullish set up forming.
CLX: The stock has held up pretty well in spite of two weeks of severe selling across the market.
SWHC: Last week's market drop pushed SWHC to new relative lows and hit our stop loss. This is probably a temporary decline. The story for SWHC hasn't changed.
NOC: Defense stocks were not immune to the market's sell-off. The recent weakness could be an opportunity but I would not be in a rush to launch positions. Keep an eye on it.
LMT: This is another defense contractor that has held up reasonably well during the market's decline.
DIS: Shares seem to be unfairly punished over worries about consumer cord-cutting in the cable industry and falling subscriber growth for DIS' ESPN unit. Watch for major support near $90.00.
MSFT: Wall Street is generally bullish on MSFT as it strengthens its position in the cloud computing industry. The stock should have major support in the $48-50 zone. Watch for it to test support and bounce.