By: Tom Gentile
on August 9th, 2023
Originally published via our newsletter previously. Subscribe for early access!
US Long-Term Foreign Currency Issuer Default rating Cut
Fitch Ratings is an international credit rating agency.
It is one of the three top credit rating agencies, alongside Moody’s and Standard & Poor’s.
They cut the US long-term foreign currency issuer default rating to AA+ from AAA.
Tuesday night due to the ratings cut, US stock futures opened lower and didn’t fare any better when the markets opened up today, opening up 100 points or so lower.
The markets didn’t gain any traction on the day closing lower.
The Dow, NASDAQ and S&P all closed lower by -0.98%, -2.17% and -1.38% respectively.
The equities market had been on quite a bullish run from the March 2023 lows.
This cut in rating by Fitch may be short-lived or depending on what the jobs numbers come in at Thursday and Friday may cause a bit more of a stall in the bullish run for now.
Stay tru to your stop loss management and be disciplined in that process.
When you have a prognosis of a market direction, use the appropriate scans to execute step one of being a successful options trader, which is finding or spotting an opportunity.
Step 2 then becomes building an acceptable risk option trade and Step 3 is managing that trade for profit and or acceptable loss.
— Tom Gentile
C1P: Chief 1-Percenter
Market in Focus
The XLP is considered the only Sector SPDR ETF that was positive on the day.
The XLV to us, is basically break even on the day so we would start our search for a bullish patterns on the Consumer Staples.
If one likes the strategy of trading stocks or options on stocks at highs anticipating strength begetting more strength, research stocks in that ETF or research options on the ETF itself.
Tools and Observations
This is what we did.
We went to www.sectorspdr.com , which is where previous image on ETF’s for Today’s Performance was obtained.
We brought up the list of holdings in the XLP, copy and pasted those symbols in to a list in my tools and then ran a Hi/Low ranker on that list.
Were there any stocks in the XLP trading at their 52-week high?
Yes – Proctor and Gamble (NYSE: PG) and Bunge Limited (NYSE: BG)
Here are the Consumer Staple stocks at 90% + of their 52-week high:
Stock and options trading has large potential rewards, but also large potential risk.
You must be aware of the risks and be willing to accept them in order to invest in the stock and options market. Do not trade with money you cannot afford to lose.
This is neither an offer to buy/sell/ or recommend a particular stock or option.
Hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been actually executed, the results may have under or overcompensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with hindsight.
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