Market Trends

Dow Jones and Company Inc. (DJ:NYSE) announced that its making changes to its Wall Street Journal print edition to differentiate it from the newspaper's online edition.

The Wall Street Journal is thinning its print edition down starting January 2, saving Dow Jones and Company $18 million in printing costs on an annual basis. Page width will shrink by 1.5 inches, taking it down to 12 inches.

These changes will eliminate one column per page, making the news articles more direct, tight, and analytical.

This is just another change from a newspaper company that is trying to pick up its reputation in a fledgling industry.

DJ is up 10.35% since September, following the lead of other newspaper companies as good “buy on the dips” opportunities.

Trading Tactics

Why would Adam and I play longer-dated call options on the streetTRACKS SPDR Homebuilders (XHB), a basket that owns names like Beazer Homes USA (BZH:NYSE), Centex Corp. (CTX:NYSE), D.R. Horton Inc. (DHI:NYSE), Pulte Homes (PHM:NYSE), and Toll Brothers Inc. (TOL:NYSE), when everybody knows that the current housing numbers are absolutely putrid? 

 

I'll tell you why. Regardless of the news coming out of the homebuilder industry, this sector is set to rally.

If the homebuilder stocks continue to report bad numbers, the perception is that we're at a bottom and it's a good buying opportunity. If the numbers are good, then the perception is that the sector has turned the corner and things are looking up.

Plus, with an average Price/Earnings ratio of 7.26, this basket of stocks has been beaten down so much that they're very cheap - even considering their reduced earnings this year! And the cool thing is, this whole back story is displayed in one simple WaveStrength Options Weekly chart of the XHB. 

Material Profits

Natural gas prices are down big time. From a high of $9.050 for January 2007 futures just three short days ago, prices have plummeted to a low of $7.626 today.

This swift drop could be the tail end of the warm temperature we experienced last week. Current lows are testing the $7.50 mark, where natural gas has found support twice in previous weeks.

With colder weather here now, expect natural gas to find support again. 

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