Market Report: Who's Rising When the Dow Is Falling?
The S&P 100 (OEX) lost 4.33% in five days. But Raytheon (RTN:NYSE) saw midweek gains of almost 3%. In fact, by the time the dust had settled on the trading floor, RTN had outperformed the OEX by some 5%.
In This Article:
- Last week, the Dow Industrials hemorrhaged 708 points, and the S&P 100 (OEX) lost 4.33% in five days…
- Raytheon (RTN:NYSE) actually gained ground, and outperformed the OEX by more than 5%, and is expected to put on another 7% over the next few weeks.
- WaveStrength Options Weekly readers are already sitting on 56% gains in just 34 days on RTN Calls.
You don’t need me to tell you just how bad the market was last week. You already know about the Dow hemorrhaging 708 points. And you almost certainly don’t want me to remind you as to how the S&P 100 (OEX) lost 4.33% in five days.
So instead, let’s talk about what went up, what stocks bucked the big suck, and who made gains in a huge downdraft. Let’s start with those handy guys out of Framingham, Massachusetts who make everything from military radar rigs to entire missile systems.
I’m talking here about Raytheon (RTN:NYSE), who actually saw midweek gains of almost 3%. In fact, by the time the dust had settled on the trading floor, RTN had outperformed the OEX by some 5%.
But that was last week. After all that bloodshed, the OEX is bouncing today. As I glance at the real time ticker, I note that the mega-caps are rebounding a bit, and have put on a whole 46 cents, a gain of 0.07% by midmorning!
So where is RTN? I’m teasing of course: I already know that it is once again gaining ground, up almost 1.5%. Now that’s the sort of beta correlation a body needs: up on down days, and up more on up days.
Now here’s the interesting part: Both the Blue Chips’ misery and RTN’s immunity to same were both quite predictable. Regular readers may recall my warnings that the range-bound market was begging for a fall.
But back in late June, I asked WOW readers to prepare their portfolios by adding puts against Wachovia (WB:NYSE) and calls against RTN. Just last Monday, I mentioned how badly it looked for WB. If you did nothing other than ditch this loser on Tuesday morning, you managed to miss out on a 2.32% loss. WOW readers are doing a bit better: as of this morning, their puts are up 68%.
I also asked them to add RTN calls. Why? We’re at war, people, and on several fronts. We’ve got active combat in Afghanistan and Iraq, and Cold War-style saber rattling in China, Russia, Pakistan and Nicaragua, so investing in military hardware is pretty much a lock.
Raytheon’s many factories provide everything from the missile defense systems that have Russia’s knickers in a knot, to the systems that funnel information to and from those Unmanned Aerial Vehicles (UAVs) scouring Waziristan for Osama bin Laden.
We’re still waiting on July numbers, but June was certainly strong enough, with Raytheon securing a $10.4 million contract on June 25 to provide an infrared sensor system used to detect hostile troop movements. It also scored a huge $115.3 million contract on June 22 with the Air Force to provide an electronic warfare system that will be used on the F-16 aircraft.
Chartwise, RTN has run like a missile, with long 35-week run-ups of around 37% followed by brief returns to support at the bottom of the rising trend. The near-term target here is $57.04, while the longer-term target is $59.68. These are conservative figures, as the stock is quite capable of putting in more than this as various government contracts spin on.
Again, I should point out that you can amplify these gains with properly selected call options. As I sit to write, WOW readers are already sitting on 56% gains on same.
Adam
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