Stocks have had a rough start this week and today’s economic reports didn’t do much to boost investor confidence. The Commerce Department reported a bleak note on housing, as sales of new single-family homes plummeted 33% in May to tag their lowest level on record. The results were even more depressing than analysts expected, and stocks slumped in response. Meanwhile, the Federal Reserve weighed in with a notably gloomier outlook on the economy. The Federal Open Market Committee (FOMC) voted to maintain record-low interest rates for the 18th consecutive month, and made a depressing tweak to its language — now, the group says the economic recovery is “proceeding,” rather than “strengthening.”
The Standard & Poors 500 chart is still bullish, in that it is above its now-rising 20-day moving average. The breakout of the 1105 level last week paved the way for a quick run to 1130 (on Monday morning, after the hints that China would let the Yuan float). That seemed to exhaust the market, and there was pretty much of a straight downward correction from there (1130) to today’s lows at 1085 — just about exactly where the moving average is. It is mildly disappointing that the 1105 level didn’t become support on the way down, but it is not a complete deal breaker that it has not. However, a close below 1080 would negate the budding bullish trend.
We’ve had three consecutive bearish sessions this week and we think we’re due for a bounce. We expect to get one tomorrow, assuming the jobless and durable numbers are in-line with expectations.
Weekly Economic Calendar:
Thursday
- Weekly initial jobless claims as well as May’s durable goods orders will be released. Lining up for earnings release will be Discover Financial Services (DFS), Lennar Corp. (LEN),H&R Block Inc. (HRB) , Oracle Corp. (ORCL), and Research In Motion Limited (RIMM).
Friday
- We round out the week with the initial third-quarter gross domestic product reading and June’s final University of Michigan consumer sentiment index. Finally, KB Home (KBH) is slated to release its quarterly earnings figures.
New Trade Idea:
Buy Las Vegas Sands (LVS) July 26 call @ $2.10 or better:
The gaming stocks have held up well during this trying week. LVS in particular looks solid. Use $4.30 as a target and $1.20 as a mental stop –loss.
Open Positions:
American International Group (AIG) July 28 Call @ $1.95:
A nice basing week for the stock and we think we’ll get a move higher this week. Use $4.00 for a target and $0.75 as a mental stop–loss.
Skechers (SKX) July 45 Call @ $1.75
Continue to hold. Use $3.80 as a target and $0.50 as a mental stop-loss for now.
Crocs (CROX) July 10 Calls @ @1.40:
A nice bounce today after weakness yeaterday. Let’s continue to use $3.20 for a target and $0.50 as a mental stop-loss.
TEN Exclusive: Options Update – 6/23/10 is an article from: 
