After a slow start, the bulls have continued their journey to new highs despite multiple downgrades on Microsoft (MSFT, $x28.79, down $1.50) that had dragged on Tech. Financial stocks are trading slightly higher as the Financial Select Spiders (XLF, $18.60, up $0.10) continue their assault on $20.
Two stocks that could give the XLF a lift will be the results from JPMorgan Chase (JPM, $49.43, up $0.18) and Wells Fargo (WFC, $37.75, up $0.18) as both companies will be reporting before the bell on Friday. The Financial stocks, in general, need to continue to show strength if the Dow is going to clear 15,000 and the S&P 1,600.
We have looked at some possible option trades for both of these stocks but the safer way to play the move up or down could be the XLF. Of course, the near-term April options on JPM and WFC could return a 2 or 3-baggers depending on which side of the trade you take but using call or put options on the XLF will limit the damage if you are wrong as it is more broad based.
We are extremely bullish on JPMorgan but Wells Fargo always makes us nervous when they confess to Wall Street. Many analysts don’t understand their business model so Wells Fargo shares can trade erratic after announcing earnings. We have a few open positions for the Weekly Wrap in the Financial space and those stocks will likely move in tandem when the numbers hit the Street tomorrow and as much as we would like to take a trade on the other 2, we will likely sit on the sidelines as we have another trade we are excited about
As far as the market, the Dow is up 62 points to 14,865 while the S&P 500 is higher by a 6-pack to 1,594. The Nasdaq is up 2 points to 3,299 but has traded above 3,300.
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