Portugal debt is downgraded by Fitch

March 24, 2010 / Jeff McAllister

Aerial photo of the General Mills corporate he... — Image via Wikipedia

Gadzooks! Portugal debt is downgraded by Fitch! Um, excuse me, but isn’t that old news???

Here’s the thing, this market has trended higher and higher and higher. At some point it needs to take a rest. A pullback of 10 – 15% here would be a healthy thing for the markets. Continuing this bullish climb on questionable economic strength, only makes the pullback likely to be that much deeper.

Personally, I’d like to see a pull back so that I could set up some long-term positions. In particular, I’m watching Berkshire Hathaway B shares (ticker brk,b) – because at $100K Plus the A shares are a bit expensive (AND they are not optionable!). Trading at roughly $82.00 now, I’d like to see it pull back to about $75. Maybe it never will again, who knows, but at this point it’s simply ranging sideways as it consolidates form its last and most recent bullish run.

I’m also looking at International Paper (ticker IP). A good solid company with good upside potential and good premium in the options. I’ve traded calendars on it for quite sometime and it does very well. I think that it will make a nice long-term covered call.

Annaly Capital Management (ticker NLY)is another that a small pullback would make for an attractive entry. They are a trust and pay out most of their profits in the form of a dividend. That dividend has run at .79/share per quarter on an $18 stock (or about 16% annually!). It’s not an exciting stock – but that’s okay with me.

So, it’s Wednesday. As I write this (07:45 Eastern time), Europe is pulling back up. General Mills reported better than expected earnings ( http://finance.yahoo.com/news/General….. )and German consumer confidence rose… All good stuff.

Looks like another interesting day of trading! (maybe I’ll start pulling off any trades that look bullish…)

Jeff McAllister

OptionsANIMAL Instructor