WaveStrength Trading Tactics for November 10, 2006
Choose An Upside Catalyst
by Ann Sosnowski
*First and foremost, I’d like to thank all of the Veterans who are being acknowledged today. Our country would not be where it is without your services!
At the open of today’s trading, I wrote in Radar about three positive developments coming out of the Blue Chip group that could’ve provided an upside market catalyst. But as the trading day got going, only two of the three stocks were embraced by Wall Street, which equated into very indecisive trading.
The one stock getting the shaft today is The Walt Disney Company (DIS:NYSE). Although it was showing a 1.5% gain after reporting its fourth-quarter net income more than doubled, the stock was quickly hit with a “sell on the news” scenario and dropped over 3%. This could be a buying opportunity, and I’ll continue to monitor DIS for more trading potential.
The one stock that’s having a great day is American International Group (AIG:NYSE), as it “avoided” any big hurricane losses and reported a surge in third-quarter net income. Unlike Disney, Wall Street embraced the news and pushed shares of AIG higher, which gave our WaveStrength Options Weekly readers a triple-digit gain on their AIG calls! Although we don’t issue sell signals in our weekly WOW service, I’d certainly consider taking your triple-digit profits off the table.
Third up is Boeing Co. (BA:NYSE), which traded higher on the news that the U.S. Air Force selected the company to provide the military's next generation of combat search and rescue helicopters, a whopping $10 billion order. BA was trading up $1.30 at last check, and threatening to break past its May 2006 high.
Now here’s the thing: Out of three major stocks reporting strong news, two are up, one is down, and the Dow is basically trading flat on the day. Add into the equation that oil prices came back down to $60.50, and that’s another bullish catalyst for the markets -- not to mention that the economy is continuing to grow, corporations are delivering better-than-expected profits, and even merger and acquisition activity is picking up.
Nevertheless, none of it is translating into much momentum either way.
Of course, Wall Street does not like indecision, and that’s exactly what we could be facing now that the Democrats have taken control of the House and the Senate.
So until all this gets sorted out, we may have a market stalemate for a few days. And this could give us an opportunity to add some much-needed protection to our positions.
More on that next week.
Until then, have a good autumn weekend.