Steady Drugs
Right now the equity market seems to be discounting European News to some degree. Overall volatility levels are dropping (still nasty little swings though) for the most part and that trend has been steady since I have been chronicling it here in the Aqumin Newsletter. The market seems to want to fight upwards. On that note I wanted to mention some names that have been clawing their way up this morning.
First off I use my daily VWAP (Value Weighted Average Price) Landscape to look for smaller movement trends. Just to see if anything is jumping. Basically, a green stock on the top of the landscape means the stock is trading above its intraday VWAP and is up on the day. The position is the Market Cap (as well as size of footprint). Essentially it is showing some strength in an overall weak market like we have this morning.
Note all of the Big Pharma Names popping up. When most of the other Big Cap names were drifting lower the MRK’s, LLY’s and PFE’s had a little juice to keep it going. The next Landscape is the HV30-HV10 look at underlying volatility. What this measures is the difference in realized underlying volatility over the last 30 days versus the last 10. Note the names were just about flat for the week (closer to the landscape horizon) and red (declining short term realized volatilities). What we have is a nice slow roll till the end of the year. I think this sets up nicely for some controlled put selling (spreads) on these low P/E names using the Jan cycle. A few fund managers might have to dress things up toward the end of the quarter and these names weathered the crisis like few others. Take a look.
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