Bull Horns & Bear Claws -- My Two Main Holdings & The S&P Will Consolidate
Aside from trading around the dips and rallies, Ford ( F) and Seadrill ( SDRL) are my two main longs right now. I don't trade around them and have occasionally changed the options around, but have essentially held them long since I started writing about them several weeks/months ago.
I think both of these stocks have the ability to continue moving up and that's why I'm long via call options. Ford has a very strong chart with bullish sentiment all around. I think the $13 range is not a ridiculous figure, especially since Ford traded up $11.85 in early trading this morning. Here's the charts for the two stocks:
$38 is the current trading price for Seadrill, which is nice to see considering I've been long for a few weeks. I knew going into it that I might be a little early, but I wanted to be sure not to miss the move. That's why I'm using April options, so that I have a while for this move to play out.
Like I've posted several times before, the last two times Seadrill breached its 200-day simple moving average it held and bounced over 30%, both times. While another 30% might be a bit of a push for this stock, I don't think a run up to the $42 range is out of the question. In fact, that is my target for the stock.
The markets have been quite resilient in the face of this Fiscal Cliff fiasco, adding the security I feel about the stock market pricing in a solution. I'm am long currently, with zero shorts, but I think we've gotten a little extended here based on price action alone. If there is a Fiscal Cliff solution, then yes, markets will move, but I think the last couple of days have given us enough gains to take some off the table. This latest move has played into the Options Newsletter trade perfectly and has allowed the profit target to be reached, while gains still reside in the trade for more aggressive traders.
I would wait to enter the market, and/or take some gains unless they are core positions, like the two I have outlined above. The S&P 500 was up double digits Monday and Tuesday, 16 points a piece I believe, which is a pretty sound start. I would wait for a little pullback or use stop losses on certain trades. This will allow for more room to the upside, but taking profits on the downside. I will look to re-establish longs shortly.