The U.S. Markets fell this week, with the S&P 500 Index dropping -2.6% since Thursday s close:

Transcription

1 April 17 th 2013 In this week s Cash Cow Newsletter we are going to assess the recent performance of the S&P 500 Index and briefly look at the current performance last week s profit opportunities. We will also look at some new profit opportunities for the April 26 th option expiration. The U.S. Markets fell this week, with the S&P 500 Index dropping -2.6% since Thursday s close: Similar drop produced strong rally The S&P 500 produced a similar drop in late February after reaching all-time highs. As you can see from the chart, the S&P 500 rallied shortly after. If 1

2 this trend repeats itself, we could be looking at an excellent entry point for a future rally. Despite this -2.6% drop in the S&P 500 Index, 2 out 3 of our positions were profitable this week. ABC ignored the recent market selloff and increased an impressive 2.32% since last Thursday s close, hitting a 52-week high in the process. Although the stock is trading above the upper Keltner Channel we should consider rolling it over into the May 13 expiration, as ABC does not trade weeklys. AHL was not as fortunate as ABC. The stock closely imitated the S&P s performance and dropped -2.75% since Thursday s close. AHL is currently trading below the middle Keltner Channel and the stock still has consistent buying pressure. We can consider rolling AHL over into the May 13 expiration, as AHL does not trade weeklys. HRL increased.37% since Thursday s close. The stock is currently trading between the middle and upper Keltner Channel. Buying pressure has remained consistent, so we can consider rolling this position over into the May 13 expiration, as HRL does not trade weeklys. Several familiar stocks that trade weekly options have earnings coming up in the next week or two. We will look to avoid these stocks as earnings reports, whether positive or negative, have the tendency to increase price volatility in the underlying stock. As weekly option traders we are looking to minimize this type of volatility. Now let s take a look at some new profit opportunities for the April 26 th option expiration. 2

3 The first profit opportunity we ll look at this week is TGT (Target): Target is a merchandise store that sells a wide variety of household essentials, electronics, home furnishings, and more. The company has good financials that include consistent Revenue growth, Equity growth, and retained earnings growth. As you can see from the chart the stock is in an up-trend and has an upsloping On Balance Volume, and is currently trading near the middle Keltner Channel. This presents a good entry point into this stock. We should consider purchasing a call option on TGT for the April 26 th profit opportunity. 3

4 The next profit opportunity we ll look at is DIA (Dow Jones Industrial Average ETF): DIA is an ETF that tracks the performance of the Dow Jones Industrial Average. The 30 companies represented in this index are all leaders in their respective industries, and the stocks are widely held by individual institutions. This ETF is a diversified low risk investment we can take advantage of by purchasing a call option. We should consider purchasing a call option on DIA for the August 26 th option expiration. 4

5 The last profit opportunity we ll look at this week is JNJ (Johnson & Johnson): We recently looked at JNJ in our March 6 th newsletter. The stock has continued to increase since then. We can clearly see that buying pressure is still consistent and the stock is still in a strong up-trend. Although JNJ is currently trading above the upper Keltner Channel, the stock still has good upside potential and is relatively unaffected by what s occurring in the market. We should consider purchasing a call option on JNJ for the April 26 th expiration. 5

6 Click on the link provided below to access the Cash Cow Archive. Cash Cow Newsletter Archive: 6