Market update

It was a busy day for me and I got back home this evening to find that the market closed up yet again.  The DOW ($INDU) is now approaching the resistance point I mentioned earlier (in the 10,600-10700 range).  On a positive note, we now have a higher high and a higher low.  As a bull, I would take this to show promise that the downtrend may be over for now.  On the other hand, looking at long term charts, there is still the possibility that we are approaching the top right point of the right shoulder in a head and shoulder pattern (see older post for charts).  This may be especially true in a monthly chart.  What this means is that there is still money to be made in good stocks but don't commit a lot of your capital if you do play the market a bit.  I am experimenting a little using options to limit my exposure but I am still mostly in cash.  Once the DOW breaks above 10,700 with conviction, I will start taking a closer look at the market.  If the market gets rejected at that point, we may see a significant pull back. 

Some of my favorite stocks are showing leadership at this time.  ISRG (Intuitive Surgical) and CMG (Chipotle) are my top two favorite stocks at this time.  CMG has been showing excellent profit and since they announced the plans for opening of new stores in Europe, I would expect them to do well in the growth arena as well.  Intuitive Surgical continues to be the 800 lb gorilla in their segment.  I liked the earnings call and the fact that their revenue share for hysterectomies is increasing fast.  They are in the razor blade business.  Yes they make money from selling the machines, but the real money is in the procedures and the disposable supplies for the robots.

Stock Update:  Closed out the Sprint Nov 4 calls at 1.10 - pocketing about a 10-15% profit.  However, unless stock moves up a lot soon, I'll give that up in my losses in the Aug 5 calls.  This phenomenon has plagued me for a long time and I am trying to figure out how to improve on this.  I will get into a position and make a decent profit.  Then instead of taking the profits, I will add additional option positions but for a shorter duration.  I tend to do this more for cheap options (and cheap underlying stocks).  Most of the time this ends up biting me, but there are times when I have made a killing.  When I figure this out, I'll post my deductions here - until then if you have figured it out, feel free to leave a comment :-)