EOT Position Update – January 18, 2012
January 18, 2012
Market Snapshot
The bull market’s back…
Stocks are surging higher to start the year. The S&P 500 is up more than 4% and the tech-heavy NASDAQ is up more than 6%. That not too bad for just a few weeks.
And here’s the best part… I believe the bull market’s only going to get stronger from here.
You see, a funny thing happened over the last few months. Investor sentiment has gone up, but investors haven’t piled into stocks like they usually do when sentiment rises.
Investors are clearly holding back. They’re opting for safer investments even though they’re bullish on stocks. And now I know why… The European sovereign debt crisis has investors scared of a full blown market meltdown.
Take a look at the chart from the Yale School of Management below. It tracks how confident investors are that there won’t be a market meltdown in the next six months.
As you can see, confidence is back at the 2009 lows. In other words, investors are as fearful today as they were back at the peak of despair over the credit crisis in 2009.
I think this is a clear indication investor fears caused by Europe are peaking. And as fear leaves the market, it should provide the fuel needed to kick this bull market into high gear. That’s great news for the call options we’ve rolled out over the last month.
Let’s move onto the updates…
Position Updates
Just a quick note: Remember, we won’t update every open position every week. I try to focus on the positions that have some significant news or price movement.
TGT April 2012 $50 Calls
TGT’s off to a great start. The retailer’s quickly bouncing back from oversold conditions. Our option reached a peak gain of 43% last week. The advance may slow down a bit as TGT approaches the 200-day moving average around $50. But it should be off to the races once it clears this level. Continue holding… Resistance is at $55 and $60. Support is at $42.50 and $40.
GLD March 2012 $166 Calls
GLD’s also off to a good start. Our options on the gold ETF are up more than 30%. But I’m expecting much bigger gains to come. Buying GLD at this support line has been a winning trade time and time again over the last four years. And I think we could have a big winner on our hands this time around. Continue holding for bigger gains ahead. Support will be at $148 and at $140. Continue buying these calls up to $3.05.
CAT February 2012 $95 Calls
CAT’s absolutely on fire! The equipment manufacturer’s going up day after day. Our options have soared to an eye-popping 240% gain! But there’s still more room for this stock (and our option) to run. Aggressive traders should continue holding for bigger gains. The next resistance is at $112. Support is at $88 and $80.
Category: EOT Update
