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John R. Conway's  Instablog

John R. Conway
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When I am not trading/investing I enjoy cooking, which is my second passion next to investing. I currently reside in St. Louis, Missouri and I am a graduate of the University of Missouri-St. Louis with a Bachelor of Liberal Studies. I also was in the US Army for eight years in the reserves/in... More
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  • 2 Defensive ETFs To Consider For A Sideways Market

    With the Dow Jones Industrial average retreating under 13,000 and the S&P 500 pulling back to under 1400 two ETFs that continue to show upside performance are the iShares Nasdaq Biotechnology Fund (IBB) and the Utilities Select Sector SPDR Fund (XLU). With the markets digesting news from Europe and China in different ways investing in stocks or ETFs can sometimes be challenging.

    The IBB and the XLU can be seen as defensive names that are less volatile and provide stability in a market that is trading in a range. When looking at prior ETF performance over the last month the IBB is up 6% from April 11, 2012 close of $119.20 to the current price of $126.43 on May 11, 2012 and the XLU is up 4.6% from April 11, 2012 close of $34.34 to the current price of 35.93 on May 11, 2012.

    The month of May can be harsh on the markets and individual stocks, but both the IBB and the XLU have been gaining traction despite the decline in the S&P 500. Both of these defensive ETFs are still outperforming the S&P 500 in the month of May and are poised to continue to slowly move higher.

    Chart foriShares Nasdaq Biotechnology

    iShares Nasdaq Biotechnology Fund

    Weather investors have invested in biotechnology companies or not this sector can sometimes be a tough sector to invest into. There are a lot of times that a biotech company's share price can dramatically rise or fall for a number or reasons. Some of these reasons include FDA approval, results of Phase III trials or discontinued funding. For investors who can find it difficult to invest in a single biotech company and want less risk, then selecting a biotech ETF may be the way to go. The IBB consists of companies that use biomedical research to improve health, find cures and treat diseases of individuals. When looking at a chart of the IBB investors will notice that the IBB has struggled to break the $125 level. On April 2, April 27, May 2 and May 8, 2012 the IBB retreated when the ETF was around the $125-$126 level and with the current price of $126.43 the IBB may be poised to break higher. One of the top holdings in the IBB is Alexion Pharmaceuticals whose share price has been continually going higher and currently in IBB's top ten holdings, none of the stocks are rated a sell. When investing in the IBB investors will also get exposure to many sub-sectors that investors wouldn't be able to get from an individual stock. Some of these sub-sectors include generic drugs, non-generic drugs, biopharmaceutical therapies and companies that specialize in treating certain life threatening diseases. For investors wanting to invest into the IBB I would wait to see if this ETF can hold above the $125-$126 level and if the IBB can, then this ETF should continue to climb higher.

    Chart foriShares Nasdaq Biotechnology

    Utilities Select Sector SPDR Fund

    On February 26, 2012 I presented an options trade on the XLU as an alternative to buying shares and I believe this is another ETF than can continue to quietly climb higher. One of my main reasons for upside performance was that investors might start to cash out gains and move to safer sectors. With the markets seeking to regain its footing the XLU can be a nice ETF for investors to generate yield despite to rocky markets. The XLU tracks the performance of electric utilities, power producers and gas utilities. The XLU also has a dividend yield at 3.90% and has a P/E of 15. When looking at a one month chart of the XLU, the ETF is up 4.6% or $1.59 from April 11, 2012 to May 11, 2012. While natural gas prices have come off their lows, natural gas prices are still relatively cheap and that is benefiting the companies in the utility sector. For investors that want stability on a sector that all people need, then I believe this sector can still perform to the upside despite the shaky markets. Even with the mild winter the XLU didn't see much downside and while I am not a weatherman, if we see a hotter than usual summer the utility sector should be poised to go higher.

    Chart forUtilities Select Sector SPDR

    In summary investors may look to add to their positions when their favorite stock or ETF pulls back, but another way to take a look at the market is by sticking with the sectors that keep performing. Generally, the XLU and the IBB are not widely talked about and can be seen as boring plays, but as long as boring keeps paying off then these two ETFs should be considered.

    Thanks For Reading and Good Luck.

    Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in XLU over the next 72 hours.

    May 14 3:07 PM | Link | Comment!
  • April Performance Review

    I would like to thank each and every follower for taking the time to follow me and read my articles. For those of you that are new every month I will provide an update of the trades that I have written about and invested into. I do not invest in everything I write about, but try to keep some balance. With the trades that I recommend I still try to keep the focus as if I was going to invest in them. Here is a breakdown of April:

    April 4th I bought 4 June 26 Deep In The Money Calls for 2.34 and sold for profit @ 2.59 Intel is a good candidate for the deep in the money call strategy. Generally deep in the money calls that are 2-3 strikes below the share price investors can nab for 2-2.50 depending on what's going on in the market. Intel has a history of running up before earnings and my theory proved right. look for me to do a similar trade before their next earnings, depending on how the markets are.

    April 6th buy 158/153 put spread on the GLD for 3.30

    i did not play this trade, but this trade would have produced a loss. Gold has been trading sideways and for the time being i don't see much upside in the short term and it looks as if the downside is limited. Gold is currently trading sideways with no near term catalysts.

    April 10 Sell may 67.50 cash secured put on BUD for $120

    trade still currently profitable and investors will be keeping 120 bucks as long as BUD stays above 67.50

    April 11 Reverse Iron Condor on Amazon for 435-- This trade was a grand slam and made the max $295 gain. This was my first reverse Iron condor trade. In the future there is only a handful of stocks that I would currently trade this strategy on due to a history of their large price movements.

    April 17 Deep in the money calls on AA $8 July calls---you could have traded these for a quick profit. I still like Alcoa and with the market slide today the calls just got even cheaper. If AA goes to 8 under no negative news from the stock-- look for me to pull the trigger.

    CF 180/185 call spread--this trade was profitable in about the time it took me to write the article. CF slide down today, but the trade was at max profit days before the stock tanked. watch the 180 level in CF and the only way I would play CF is with Reverse iron condors or spreads. Stock is too volatile for a directional strategy

    April 23 BRK.B sell June 77.50 put for 100--Stock still above 77.50 and investors will be collecting 100 as long as stock stays above 77.50

    April 23 COST (Costco) I bought the June 85 calls for 4.30 and sold out at 5.05 the trade i recommended was the 85/87.50 call spread and either way you would be a winner as the trade was profitable before the market pullback on thursday and friday. In the long term I still like the story on Costco, but wait for low 80's to consider a move

    April 27 May 52.50/50 strangle I bought (5) for 1.03 and sold for 1.21 If outright calls were purchased you would have made a nice profit as Home Depot made a nice run from mid 51's to past 52.50 pretty fast.

    In conclusion I want to thank all my followers again and remember if you have any questions/comments or just want to swap trade ideas feel free to message me anytime. Thanks again--John

    Disclosure: I am long SBUX, MO.

    May 05 2:48 AM | Link | Comment!
  • March Performance

    Here is a breakdown of all the articles I have written and how the trades played out.

    On March 13th I recommended (SWHC) Smith & Wesson June 5 calls going for 2.10. If you sat and did nothing until now the calls are now worth 3.40 or about 1.30 gain per contract. I would call this a home run trade. SWHC is still up 1.30 from the date of recommendation.

    On March 16th I recommended SPY put may 138 that was going for 2.89

    When the trade was recommended the SPY closed at 140.30 and is now at 141.26 3/28 provided a quick close date since if one was to just hold on to these puts they are now worth 1.48 per contract. The SPY is more of a fast money trade, unless the trend is clearly in one direction. Even when I am betting on one direction, when I trade the SPY bullish or bearish this is generally a quick trade.

    On March 22 I recommended the XLY that was trading at $44.60 and is now trading $45.12 There was no specific option play, just buying calls on dips.

    On March 23 I recommended MO June 28 calls at 2.36 and are now going for 3.25. When I recommended MO (as I have many times) the stock was trading at 30.40 and is now trading at 31.09

    For disclosure I did put on a option play in MO and took profits. But, nit a bad play i one sat and did nothing for 2 weeks and made $89 per contract!

    On March 23 I recommended WMT June 57.50 calls going for 3.85 they are now going for 3.50 The stock is still flat since being at 60.75 on March 23 to now closing at 60.65 There was about 1 day where traders could of made a small profit, but at the time being traders if they held would be down $35 per contract.

    On March 23 I recommended MSFT May 19 28 calls going for 4.00 and the stock was at 32.01 The calls are now going for 4.05 and the stock is at 31.85 The first couple of day traders could make an easy buck, but the stock is currently flat.

    On March 28 I recommended Visa June 120/125 call spread at 2.12 the spread is now at 2.29 The stock was at 119.35 and is now at 120.36 Lets see how this plays out

    On March 30 I recommended Ford June 10 calls going for 2.35 I did this trade and exited out at 2.69 When I bought in the stock was at 12.35 and now the stock is at 12.64 I am still bullish on Ford and would buy again if Ford got close to 12.

    I wanted to personally thank all my followers and I will be providing a instablog every month to show you performance. I understand that with investing our main goal is to have positive performance. Even though I don't trade every article I write, I always strive when I write an article as if I was really trading the stock I am writing about since if i have a track record of poor performance, I most likely won't be taken seriously.

    March was a good month if investors were bullish and In the first quarter Bulls 35 Bears 7. I'm looking forward to April and the start of Q2. If you ever have any questions or comments feel free to send a message. Thanks for Reading and Good Luck

    Disclosure: I am long INTC.

    Apr 05 11:17 AM | Link | Comment!
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