Bullish US Market

Just my opinion. Caveat emptor ...

The VIX appears to have attained steady state after staying below 35 level in last three months. That is good news as the investors have regained confidence considerably and the market will move up progressively with techinical corrections from time to time.

The US Finance sector looks bullish even after the recent rise in prices. That can be seen from GSPC (S&P500), ^XII (AMEX INSTITUTIONAL INDEX) and ^BKK(KBW Bank Index) all making new highs on Friday close. The following 3 stocks provide a partial view of the stocks in this sector:

Citi Group (C, last closed at 4.70) has been considered long term bearish for the past 2+ years when it last crossed below 200 Days Moving Average (or 200D MA) in Jul 2007. It has just crossed above 200D MA on 20 Aug 09 to signify the change in long term trend and made new 6 month high by gaping up on 21 Aug 09. For the near term, although the Price Oscillator indicator (Osc) might be showing bearish divergent and the last candlestick was a bearish tombstone doji, its bullish signs are stronger than the bearish ones. They include rising CCI, rising volume and two consecutive accumulation days in last two sessions. The immediate target is 5.50, a possible 17% profit if stock is longed at Friday close. Higher profit margins are possible if options are traded. The magnitude of these higher margins depend on the selected strike price, expiry month and the option strategy. Price of C is likely to rise past 7.50 which is the next target. To protect the trade capital and profit, this new position should be closed if the price falls below 4.50 which is just below Thursday's high. The "sell stop" shall be progressively moved higher when the profit starts to grow. This long trade position shall only be triggered if the market trades above 20 Aug 09's close @4.51.

Master Card (MA, last closed at 207.25) is another attractive stock. Last week, MA consolidated almost 6.5% from the recent peak @209.27 before rising again. It gapped up on 21 Aug 09 and the "close price" was the highest "close price" in past 12 months. Its bullish signs include: consecutive accumulation days in last two sessions and the Elliot wave 5's PTI is @57. The immediate target is 220 which is 6% profit if stock is longed at Friday close. Option play is recommended here to benefit from its limited risk and higher leverage gain. I prefer near month option with delta around 0.2 or more. To protect the trade capital and profit, I will close this new position if stock price falls below Thursday close of 203. This long trade position shall be triggered only if market trades above Friday close.

VISA (V, last closed at 69.0) is regarded as the sister stock of MA. Same trade approach may be used. The immediate target is 75.0 which is 8% profit if stock is longed at Friday's close. Option play is recommended here to benefit from its limited risk and higher leverage gain.

The bullish US market undoubtedly will add more confidence to the already bullish Asia markets. My prefered Singapore stocks are also in Finance Sector, notably DBS and SGX.