Updated throughout the week
Wednesday’s Close for July 20th, 2011
Written by: Mike Coval
The lack of follow through on the market was a grim reminder of just how volatile and scared this economic recovery, or lack thereof, really is. We had a fantastic rally on Tuesday and yet no one was able to carry it through which would indicate a bullish stance. Until the August 2nd deadline rolls around for the debt limit vote, we are likely going to see just as many down days as up.
The Dow closed lower by 16 points to 12,572 while the Nasdaq finished down 12 at 2,814.
|
Dow |
Nasdaq |
S&P 500 |
|
Resistance 12,719 |
Resistance 2,873 |
Resistance 1,353 |
|
Support 12,390 |
Support 2,762 |
Support 1,305 |
|
Stance Neutral |
Stance Neutral |
Stance Neutral |
Energy: Oil has been trading in a very tight trading range for the past two weeks and today only managed to fall slightly. Late in the day, the price of crude futures were trading down $0.22 at $98.26 a barrel. Track the price of crude with the Oil ETF, USO.
Economic News: Fitch Ratings said on Wednesday it will decide next month whether the United States deserves to keep a stable outlook on its AAA credit rating as it concludes a review of the country’s economic and fiscal outlook.
David Riley, Fitch’s main analyst for the United States, said the decision will take into account a final budget agreement in Washington to reduce the country’s deficit in the medium to long term. "To some extent we are a little bit on hold because we want to see what comes out from the current negotiations," Riley told Reuters in an interview, welcoming the apparent progress being made by a group of six Democrat and Republican senators to cut the deficit by $3.7 trillion.
Both Moody’s and Standard & Poor’s have put the ratings on review for a possible downgrade.
Technology: Intel Corp, INTC, trimmed its forecast for 2011 personal computer unit sales, warning of softness in mature markets which caused its shares to fall $0.07.
The top maker of microprocessors for PCs now expects 8 to 10 percent growth in unit shipments of computers this year, down from the low double-digits it had stuck to earlier in defiance of fears that market momentum was decelerating. The news canceled out the better than expected revenue numbers released the night before.
If you’re considering buying the stock for some covered call writing then you might try selling the August $22.00 put for $0.40 giving you a nice cost basis of $21.60 if you are assigned.
Financials: If you like the thought of making money off of debt then take a look at American Express, AXP. The New York-based company posted quarterly earnings for common shareholders of $1.32 billion, or $1.10 a share, compared with $1.00 billion, or 84 cents a share, in the same quarter last year.
Average spending on the company’s cards for the quarter rose 15 percent to $3,767 from the same period a year ago and the number of outstanding American Express cards rose 6 percent to 94 million.
What about buying the Sept $50.00 call for $3.40 and then selling the Sept $50.00 put for $1.30 giving you a debit of $2.10. Your breakeven price is then with the stock at $52.10 or higher and with the stock already trading at $52.09 it shouldn’t take too long.




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