The market loves to surprise you.
Just when you think the market is about to grind to a halt for the summer, it wakes you up with back to back 1% moves, and the single-highest increase in volatility in the entire month of June. Volatility correlates with fear in the marketplace, and a lot of pundits are saying that a 5% correction is around the corner. Caution is needed when the volatility begins to spike during typically slow months. There are a lot of weak hands out there, and fear is never good when it comes to the market.
We love our recent common stock position in UEC, which is up over 10% since we began trading it. We expect one more push higher before it begins heading back towards the middle of the range. If it fails to break out, we will exit our position with an eye for re-initiation a bit lower.
Another position we really love this week is BAC. After last week's stress test, there aren't many headwinds for this stock. If we can stay above $24 this week, we're extremely bullish. We've got a tight leash, however, as a move under $24 might signal a return to $23 or lower.
We picked up AMZN calls right at the close, as we're predicting big things during this week's trading, however short it might be. Some big buying back into the tech space could get this one right back over $1,000 again soon enough.
We also grabbed some longer term MU calls on Friday that give us some reasonable exposure to semiconductors should they continue to rally into the fall. With stocks like MU, sometimes you just have to buy the quick dip if you want a chance at the large returns it's been experiencing.
We really want to advise on caution here; keep your cards close to your chest. Be prepared to initiate positions, but don't feel forced to jump in. Last week's volatility was violent, and being on the wrong side of one of those 2% moves can be damaging to your portfolio. Don't get discouraged if you don't find any set ups you love this week. We'll show you what we're looking at below.
Materials had a huge run this past week, and we want to see where this one goes from here. We're holding large positions, and likely won't add to steel, but we really like the way MOS and CF are setting up, and think those might go next in pursuit of other materials.
Tech took a pounding this past week, with the Nasdaq dropping 2% on two separate days. A lot of these stocks are sitting at support, so if you see it hold the line on Monday, it might be time to take a quick ride. Some of the names we like are AAPL, YY, and QCOM.
Longer term positions could be initiated here for TRIP, JNPR, and PYPL as well. These positions might be slower at first, but could pay off years down the road.
This week we are generally keeping an eye on the "market darling" stocks that usually garner a lot of attention. If these stocks manage to hold their support levels, then we could have a ripper of a rally on our hands in the near future.
- The Minotaur Team