The New-Phonebook Market

 | May 03, 2013 | 3:00 PM EDT
  • Comment
  • Print Print
  • Print
Stock quotes in this article:




This commentary also appears on Real Money Pro -- Click here to learn about this dynamic market information service for active traders. 

The new highs are here!  The new highs are here!

I can just envision Steve Martin's character from "The Jerk" running around in his white uniform and white hat screaming about new market highs. Today good news is good news. So, we have good news as good news and bad news as good news. The move is impressive to say the least. It blew my short-thesis concepts out of the water from yesterday on the Russell 2000.

I still am looking at some downside plays. I continue to view the opportunity there in the staples and the utilities. Looking at the Utilities Select Sector ETF (XLU), it is clear this basket of stocks has made a huge run. Some momentum has now come off the group as the risk-on trade is back in vogue. Even if folks get defensive, I think that will include selling more XLU. But I expect any downside to be tempered with the worst-case scenario being a short-term pullback to $38, but the $39-40 area more likely. So, I want to employ a ratio put spread trade on XLU. I am a buyer of the June 41 puts while selling 2x of the June 39 puts against the long put for a cost of $0.34. This sets my profit zone to a level below $40.66 and above $37.35. These are levels I feel very comfortable with using. A more aggressive trader might use a long 1 by short 3 ratio for a cost around $0.08, but they would have to be a very willing buyer below $39 or watch the position closely.


Utilities Select Sector ETF (XLU)


On the long side, I've added shares of Avis Budget Group (CAR). Initially the stock sold off yesterday after its earnings report, but it surged back into positive territory and has continued the trend today. I'm looking for a move over $32 on a breakout of this channel. Stochastics are regaining their upside move, but still have further room to move and the RSI is confirming the breakout of the price. I want to stay smaller here, so I can give this one a stop on a close below $27.


Avis Budget Group (CAR)


Columnist Conversations

there is some very heavy selling today and poor price action in Facebook today.  in the first hour the st...
Stock has been roasted last five trading sessions. Time to rotate into Ford ahead of big CEO long-term plan re...
Equity futures were up slightly just before 9:30 PM Sunday night.



News Breaks

Powered by


Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.