2/1 Morningline

Blue chip stocks (SPY) and their associated fear index (VIX), Treasury long bonds (TLT), and oil (USO) are trading within the ranges they set on Friday.

Gold (GLD) has gapped up, and the price of junk bonds (JNK), the latter suggesting high interest rates to cover an increased likelihood of corporate default. This is pessimistic for the recovery.

I'll be adding a new indicator, EEM, an exchange-traded fund that tracks emerging markets. EEM is in bear mode and has been trending mainly downward (with one one-day wonder to the upside) since Jan. 11. My backtesting this weekend produced dismal results for Person's Proprietary Signal, the technical indicator I've been tracking. So I'll be tossing the pps into the back of my desk drawer, pending further testing, and shall switch to the moving average convergence-divergence (macd) signaler for calling bull or bear mode. Read about the macd in Stockcharts, Wikipedia and Investopedia.

The macd is somewhat less sensitive than the pps -- i.e., fewer signals -- and like all signals it is sometimes prone to whipsaws.

I used the pps basically as a signal of which issues and times were worth further investigation. It was a gate-keeper. The macd signals are equally clear, and I shall use it for the same function. The need for being trading with the trend and looking at other factors touching the trade doesn't go away.

And so, huzzah! Let's look at the numbers:

Indicators, at about 10:15 a.m. Eastern:

• Blue chip stocks (SPY) is trading at $10864, entered macd bear mode at close on Jan. 20 (at $113.89)
• Fear index or volatility (VIX) 23.26, bull (bearish for stocks), Jan.20 (18.68)
• Treasury long bonds (TLT) $91.11, bull, Jan. 12 ($90.32)
• Corporate junk bonds (JNK) $38.64, bear, Jan. 19 ($39.87) 
• Emerging markets (EEM) $39.00, bear, Jan. 15 ($41.95)
• Gold (GLD) $107.36, bear, Jan. 12 ($107.37) (A much worse entry than the pps gave.)
• Oil (USO) $36.23, bear, Jan. 15, ($38.40)

 Forex currency pairs:

• Dollars per euro (EUR/USD) $1.3916, bear, Jan. 20 ($1.4106) (Also a worse entry than the pps)
• Yen per dollar (USD/JPY) ¥90.83, bear, Jan. 12 (90.97) (Showing a pps bull signal this morning, with the macd 0.13 below the zero-line.)

Stock options holdings, February expiry:

• CVS, iron condor (p29/-p31/-c34/c36) $32.61, bear, Jan. 21 ($33.24) (Earnings is Feb. 8. Should I hold and risk a surprise?)
  
• ERTS, iron condor (p15/-p16/-c18/c19)  $16.60, bear, Jan. 12 ($16.85) (Earnings also Feb. 8.)
• MCO, covered call (-c30) $27.99, bull, Jan. 28 (28.32) (A day later the macd is showing a potential bear signal, so it's a whipsaw if that signal stands.)(Earnings Feb. 4)
• PALM, covered call (s/-c13)  $10.30, bear, Jan. 26 ($11.17)

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Topics:
S&P 500, SPDR, Spiders, Treasury bonds, high-yield corporate junk bonds, emerging markets, gold, precious metals, oil, petroleum, CVS, pharmacies, drugs, Electronic Arts games, Moodys bond rating, Palm smartphone Pixi Pri.