Weekend Warrior

Market Overview for 11/6:


This morning at 8:30 the labor department will grace us with the monthly jobs report. As I write this the outlook is for the economy to have created an additional 240,000 jobs.  First-time jobless claims (reported yesterday) dropped 10,000 to a three-week low of 278,000 in the week ended Nov. 1.  The four-week moving average, a less-volatile measure of job cuts, reached the lowest level in more than 14 years. Let the pundits argue the report for a week or so to come. Ignore what they say.

Stock News:  Genworth (GNW) plunged 38 percent, the most since the financial crisis in 2008. The company yesterday posted a quarterly loss of $844 million. Qualcomm (QCOM) slid 8.6 percent. A previously disclosed investigation by China’s antitrust regulator into its business practices will hurt sales and profit next year. Akorn (AKRX) reported a messy quarter, slamming the stock. Whole Foods Market (WFM) reported view-topping fourth-quarter results late Wednesday.

Real Estate:

A few weeks ago I got into a discussion with a member or two about Worden’s switch to version 12.4 and not being able to export data or have a third party software read the data. Also the new Morningstar sector and group assignments were discussed along with knowledge that Worden will not include the new Morningstar sector assignments into the version I have. As discussed I am working (in my spare time) converting the Morningstar sectors to ETFs. For today though lets compare the real estate SX40 (version 12.4) and the older groupings MG440 and IYR.

Lets compare charts of the 3, SX40 then MG440, then IYR:

sx40 MG440 IYR

The charts all look the same to me. The recent advance amounts to about 10% (eyeballing prices only). This should make sense to everyone as you would not expect one index to go one way and a similar index to go the other way. Therefore until I can convert the composite charts on MG440 will probably look identical to SX40 or IYR.

If you want to look through the component stocks of the entire sector or the groups within. Go to Databases/Charts in the navigation on top. Then to the 6th bullet point: List stocks by Sector & Industry Group. Then plug in the corresponding number, i.e. 440 for all of real estate or one of the groups within.

440 REAL ESTATE (All Real Estate)
441 REIT – Diversified/Industrial
442 REIT – Office
443 REIT – Healthcare Facilities
444 REIT – Hotel/Motel
445 REIT – Industrial
446 REIT – Residential
446 REIT – Retail
447 Mortgage Investment
448 Property Management
449 Real Estate Development

Eventually I will have to switch over to the ETFs but perhaps the timing can be pushed back a bit. For users of TC2000 version 12.4 the MG group charts along with the new are all there. Compare the charts as I did above. If they are virtually the same proceed as you would have before.

Sector Watch:

Screen Shot 2014-11-06 at 6.14.49 PMThe longer term weak sectors and industry group ETFs have once again jumped to the top of the daily gainers. For what its worth at this stage, this is nothing more than oversold bounces , as many have really collapsed. That being said Biotech has reasserted itself as a leader after a brief correction. Worst performing sector ETF today, down 1.7% XLU. Small correction? Probably, time will tell.


Option Writing Income Ideas: 

Option writing on income producing stocks is a great way to produce additional income for those that desire that additional income. The spreadsheet for you to make your calculations is HERE! If you cannot access this spreadsheet it means you have not requested to have it shared. Request and it will be! 😎

Interestingly the sector talked about above is one area to find income producing stocks; real estate or REITS (Real Estate Investment Trusts) to be more precise. Another is the Utility sector. Sometimes in today’s environment it can be tough to execute both sides of the trade simultaneously. This is often do to wide spreads or very little premium in the options.

One way to handle this conundrum if you will is to look to buy the stock when its down and just beginning to outperform. Then after the stock rallies a bit, look to sell the call, As an example lets look at the ETF XLU:

xluFool with the moving average above depending upon the issue in question but note the point at which XLU began its out performance around October 9. So lets say the buy is around 42 and a half. Now at 46 we have an approximate 8% gain on the purchase. And as I write this the December 20, $46 call is selling at about $1 or $100 for a hundred share position.

Of course when looking at an income producing stock, when they go ex-dividend is an important consideration as to the option writing month. If the stock goes ex-dividend in December look to write a January call.

Today’s Reports and Earnings:

Talking Points and Is It Too Late to Get Into the U.S. Dollar?:

Retirement Planning: Millennials vs. Boomers (Research Affiliates)
An Exercise to Become a More Powerful Listener (HBR)
Two Reasons The Fed Will Be Slow To Raise Rates (Short Takes)
QE Worked, But Not as Advertised (Columbia Management)
The True State of Recovery (Alhambra)
Inequality, exhibit A: Walmart and the wealth of American families (EPI)
Throwing Financial “Experts” Under the Bus (Prag Cap)
What the Forecasts Got Right, and Wrong (The Upshot)
Doubting the Economic Data? Consider the Source (NY Times)
Exit Polls Say 1% of People Think the Economy Is “Excellent.” Guess Which 1%? (WonkBlog)
Did Wall Street buy this election? (MarketWatch)
One way or another, Ford’s new aluminium truck is a game-changer. (Economist)
Machine-Learning Maestro Michael Jordan on the Delusions of Big Data and Other Huge Engineering Efforts (IEEE Spectrum)
Science in a Republican Senate: The Good, the Bad and the Ugly (Scientific American)
How Iceland Is Benefiting From Climate Change (Newsweek)
The Secret Sauce of the Investment Business (A Wealth of Common Sense)

Is It Too Late to Get Into the U.S. Dollar?

Have A Great Day!