Market Overview

PreMarket Prep Recap: Muted Reaction To Trade Tensions, A Look At The Dividend Capture Strategy

Share:
PreMarket Prep Recap: Muted Reaction To Trade Tensions, A Look At The Dividend Capture Strategy

With limited earnings reports and changes in analyst ratings, Friday's PreMarket Prep podcast focused mostly on the broad market and issues of interest from our listening audience.

Trade Tensions Met With Muted Response

Trade tensions surfaced in Wednesday's after-hours session when President Donald Trump signed legislation that for the most part backs Hong Kong's independence

That news instigated a quick decline that went no further than Thursday's low in the S&P 500 futures indexes and rebounded. In premarket trading following the decline, in the index was able to sneak into the 3,150 handle, but came up shy of Wednesday's all-closing-high price of 3,153.75.

Both hosts of the show were surprised that more damage had not been done and were cautiously bullish for the session. Co-host Dennis Dick said that with the index at an all-time-high, he may trim some swing long positions ahead of the weekend, but is not yet ready to short the market.

Buffett's Black Friday Buying Effort Thwarted By Apollo 

On the merger and acquisition front, Tech Data Corp (NASDAQ: TECD) was purchased by Apollo Global Management LLC (NYSE: APO) for $145 per share.

They upped the price from an initial bid of $130. Warren Buffett's Berkshire Hathaway Inc. (NYSE: BRK-A) (NYSE: BRK-B) showed interest at $140, but that was it.

Outside of the deal itself, it should be noted that Buffett is attempting to put his cash horde to work and not necessarily in any of his current holdings. It's potentially a signal from Buffett that the rally in the broad market may be extended heading into year-end.

Coca-Cola, Kellogg Go Ex-Dividend 

Issues with higher-than-average dividends are often discussed on PreMarket Prep, as some investors employ a dividend capture strategy.

This allows income-seeking investors to purchase a stock weeks or a day before their ex-dividend date and exit the day it is paid or shortly thereafter.

The key to this strategy is to purchase the issue at a cheap enough price that that all profits are not wiped out when the dividend is subtracted from the price the day after it is paid. Ex-dividends date may sometimes signal a short-term top in an issue.

Investors employing this strategy must note the adjusted price for an issue — the previous day's close minus the dividend — to determine their exit strategy.

Marc Chaikin Joins The Show

Marc Chakin of Chaikin Analytics joined the broadcast Friday, expounding on his bearish thesis for Tesla Inc (NASDAQ: TLSA) and Netflix Inc (NASDAQ: NFLX) and reiterating his year-end 3,200 price target for the S&P 500 Index.

On Monday's show, Anne-Marie Bayind, author of The Tradingbook.com, will be our guest at 8:15 a.m.

Related Links: 

PreMarket Prep Recap: Q3 Earnings Season Coming To An End, Tesla Still Looks Toppy

PreMarket Prep Recap: Merger Monday, Tesla Two-Step, Street Fades Netflix Downgrade

Posted-In: PreMarket Prep trade warLong Ideas Short Ideas Dividends Trading Ideas Best of Benzinga

 

Related Articles (APO + BRK-A)

View Comments and Join the Discussion!

Bleakley's Peter Boockvar Talks About Buffett's Tech Data Loss

TSEM: Panasonic is Selling its Share of TPSCo to Nuvoton as of June 1, 2020