Market Continues Recovery As Volatility Drops Sharply

An encouraging sign as the market posted strong gains for the week despite the negative news that dominated the headlines. Concerns in Japan, while still high, subsided as nuclear issues appear more under control. Tensions in the Middle East continue, but avoided the major escalations that would threaten market confidence here. All of our portfolios responded nicely, with weekly gains that exceeded the market rebound. Our options portfolio saw the biggest delta, rising more than 14%, an exceptional turnaround which gets us back to a YTD return of 8.6%. This portfolio is the most volatile due to the nature of shorter term option trades, but has also been the most rewarding. For the options portfolio, we use the same stock section strategy used for stock portfolios, but instead of buying the stock outright, place options trades where pricing is reasonable. The other big event this week was the sharp decline in volatility (VIX). Generally speaking options prices become cheaper when the VIX falls, and that makes this a good time to buy long positions, both calls and puts. We plan to increase our long option positions over the next week or two. In addition, when volatility falls, that makes buying protection more affordable, a strategy that can be put in place through buying puts or long put spreads. We like to use a proxy for the market index when buying protection, for instance put options against the SPY or SPX. Our timing was perfect when we sold our protection the prior week for big profits and we may consider buying the protection once again given the recent sharp drop in volatility. We did not execute any stock transactions last week, but are looking to buy a stock or two if the market can hold the current uptrend. We remain cautious over the near term, bullish long term and encourage aggressive buying when the market comes under selling pressure. As the market finds its footing and trends upward, we plan to become more aggressive rotating out of laggards and buying those with stocks that are outperforming the market.

Momentum And Value (MAV Screen): Breakout Stocks To Buy!

What Stock Tips do we have? Our complete list of watch list stocks can be found on our website (see link below). We have seven stocks on our watch list for purchase, in addition to the stocks we already own. For this week, we are adding one new stock to our watch list, Impax Laboratories (IPXL). Impax is a specialty pharmaceutical company that is focused on development and commercialization generic pharmaceuticals, as well as branded products. The long term story of an aging population under the microscope of government cost controls should help the generic industry expand across all competitors. As for Impax, they have grown sales and earnings at triple digit growth rates, yet the PE remains very attractive for a company experiencing strong growth. The share price has outperformed the market over the past 3, 6, and 12 months. Most recently the stock has been consolidating over the past 10 days between $24 and $25 as stock accumulation continues to climb. We think now is an excellent time to buy and could see this stock moving up 30% over the remainder of this year. Overall, as we mentioned before, we are still cautious near term, but would view additional market declines as a great buying opportunity. Generally speaking, we are not selling this market, and given the performance last week, are seeing signs of a stabilizing market. We now plan to begin gradually putting our sideline cash back into the market.

Get Daily Updates On Breakout Stocks From:
http://www.marketbeatingstocks.com