Opportunity in Stocks & Options


Mar 14

While historically, I have preferred futures and plan to continue to focus on futures trading. Recently, I have been exploring opportunity in stock and options trades.

While the S&P 500 closed down less than 1/10th of a percentage point today and most of the other equity index futures were mostly unchanged, DELL closed up 4%, BA was down 1%, and GE was up over 2%. Clearly, there was greater opportunity set in individual stocks today. Futures tend to provide greater opportunity when there are strong global macro themes and higher volatility that can support shorter term trading.

Recently, I performed rudimentary analysis of public hedge fund reports. One of the criteria that I looked for was new allocations (new long positions in stocks). This provided to me a list of interesting prospects which I then filtered based on my own read of the charts and sentiment regarding near term outlook. One service that attempts to make this sort of analysis easier is WhaleWisdom.

Some of these stock finds were interesting but didn’t pass muster on my personal bias. For example, I found buying in BHGE (Baker Hughes, GE). It was a stock I had already considered. It is a beat down stock that might offer exceptional value opportunity. However, my sentiment on the outlook for oil is mixed to negative. So, I will keep that one in mind, in the hopper, as an idea should my outlook for oil change.

A more interesting find was DELL and after quick examination of the chart, I find it easier to get bullish about the near term, say out to 3 months, prospects for DELL.

Disclaimer: My sentiments can quickly change, and I have no intention to revise outlook or forecasts. I may or may not hold bullish or bearish positions in any stocks listed depending on when you read this. No recommendation to buy or sell.

About the Author

Curtis is passionate about markets. He has developed top ranked futures strategies. His core focus is (1) applying machine learning and developing systematic strategies, and (2) solving the toughest problems of discretionary trading by applying quantitative tools, machine learning, and performance discipline. You can contact him at curtis@beyondbacktesting.com.