PeakTrader.com

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Tue: Buys BMY Sells OIH SLB MDY IWM CME GOOG

Primary Trades:

OIH has risen about 30 points in January, on top of big gains last year. Most oil stocks haven't reported earnings & guidance yet, which are expected to be high. Oil is above 68 and OPEC meets January 31st. Oil stocks may pullback short-term on the oil inventory report Wed at 10:30 AM ET, since inventories have been rising over the past few weeks, in part, from the mild winter in most of the U.S., and most oil stocks are severely overbought. Oil inventories are roughly at average historical levels (over the past year). Yet, many oil stocks are at all-time highs. It seems, oil stocks are creating a final "blow-off top," and when the trend shifts, the pullback may be steep, even if oil falls to only slightly below 65. Greater volatility or a pullback may begin tomorrow or just before the OPEC meeting next Tue. OIH Feb 145 or 150 puts, or Apr 140 or 145 puts are buys. SLB is technically more overbought than OIH, and Feb 125 or May 120 puts are buys.

MDY (mid cap ETF) and IWM (small cap ETF) puts are buys on market bounces, since they're relatively overvalued. It's likely the market will continue the downtrend after the oversold bounce. MDY rose 0.60 today to just over 139. Major support levels are roughly 137, 135, and 130 to 132. Feb, Mar, or Jun slightly in-the-money puts are buys on market bounces. Also, IWM Feb or May slightly-in-the money puts are buys.

Secondary Trades:

BMY has been restructuring and it's a turnaround play. BMY reports earnings Wed. The price is low enough for a bounce.

CME closed at 384 1/2 and has been trading just above the 50-day MA, at 374, which has flattened. Puts may be bought for a 10-point fall to just above 374.

GOOG rose 28 points to 427 1/2. Feb or Mar puts may be a buy on another 10 point rise. GOOG earnings is next Tue.


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Primary Trade: An intermediate or long term trade. Timing can be off substantially. Volatility not a factor. Risk is low to moderate. Potential return is often moderate.

Secondary Trade: A short term trade. Timing must be accurate or volatility must be high. Risk is high. Potential return is high.

Secondary Trades should be generally avoided, although considered. Note: If Secondary Trades are taken, they may affect Primary Trades.