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John Person's Bottom-Line Market Mid Month Report

Hey folks,

Ben Bernanke gave the market hope for another round of quantitative easing as he projected a weaker economy. Stocks rallied off the daily lows. The Financial sector responded with a whimper but is slightly positive reading +.08 cents in the (XLF)

However, I have a potential play on Consumer Discretionary sector (XLY).
I have listed below the top ten companies and where they are currently priced in addition where they are located in relationship to their 52 week highs or lows. Also included I have the disclosed earnings release dates.

The travesty with PFG after the MF Global fiasco and the lack of accountability with both the NFA and CFTC or any kind of immediate solution as to how to make clients whole is nothing less than a joke. Regulators are pointing fingers at each other in order to save their jobs and reputations.

I think consumers are spending money on things & entertainment, not markets and investments. Stocks like Disney and Home Depot have strong forward looking guidance and I am confident Target will not disappoint. But it is tough to buy individual stocks at these levels.

Certainly this latest bit of news might dampen confidence for commodity traders. However I see opportunity in the ETF sectors right now. Particularly in the consumer discretionary space.

The relative strength comparison against the overall market the S&P 500 is not impressive, but the reason is the XLY has been in a eight week trading range. I believe it can breakout of this range with the upside target of the 46.22 level, as the weekly chart below in figure 1 shows.  The Person Momentum Histogram indicator reflects we have triggered into a weekly buy mode.

Figure 1

    Stock traders can look to go long (XLY) near 43.60 using stops under last weeks low with upside objective at 46.22. This move can be expected to take place by the end of July.

    Options traders: The Implied Volatility is 20.11% near the 52 week lows. Therefore it may be best to look at buying long premium. Suggested course of action defined risk vertical spreads August expiration (31 DTE) 43/45 strikes for .98 cents.


The stocks below are the top ten cap weighted holdings for the (XLY) I included today’s trade price as of 2:30 (CT) and location near the 52 week high or low and the estimated earnings date.

McDonalds (MCD) Near 52 week highs now at 61.29. Earnings on 8-1.
Disney (DIS) near 52 week highs at 49.39, earnings on 8-7.
Comcast (CMCSA) 14% off 52 week highs at 216, earnings on 8-1.
Amazon ( AMZN) Near 52 week highs now at 61.29. Earnings on 7-26.
Home Depot (HD) Near 52 week highs now at 50.78. Earnings on 8-14.
News Corp. (NWSA) Near 52 week highs now at 22.23. Earnings on 8-8.
Starbucks (SBUX) 15% off 52 week highs at 53.75, earnings on 7-26.
Target (TGT) Near 52 week highs now at 61.29. Earnings on ?
Time Warner (TWX) near 52 week highs at 38.79. Earnings on 8-1.
Ford (F) Near 52 week lows now at 9.31. Earnings on 7-25.

All the best,
John Person


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