EOT Position Update – February 8, 2012
February 8, 2012
Market Snapshot
January & Jobs…
Last week I pointed out January ended positive for the month. After taking a closer look, the S&P 500 turned in the best January since 1997. And I’d bet you know the saying, “As January goes, so goes the year”…
If you’re not aware, this saying is derived from an actual stock performance gauge. Back in 1972, Yale Hirsch devised an indicator which tracks the S&P 500’s performance in January, as a forecast for the rest of the year. It’s known as the January Barometer.
So far, the indicator has registered only seven major errors since 1950. And that gives the January Barometer a 90% accuracy rating! So things are looking pretty good for the rest of 2012…
Now, if you’re looking for more than a predictive forecasting tool to invest in… no worries. We’re witnessing real fundamental data improving on a daily basis. And that’s something just about everyone wants to see.
The most important piece of the US economy is finally heating up…
Just last week, we saw data pointing to an improving US jobs market. The unemployment rate fell to 8.3% and the economy added over 243,000 jobs.That’s a great step forward for one of the toughest parts of the economy.
Even better, the US Labor Department released a positive job openings survey yesterday. Apparently, the number of US jobs waiting to be filled in December rose to 3.4 million. That same reading was just 3.1 million in November.
With everything in the US appearing to improve, we’re still cautious about a potential messy default in Greece. The European leaders have yet to finalize agreements with the new Greek government.
Even worse, the Greeks still needs to pass the extensive austerity measures in order to collect their next bailout tranche. Let’s hope things pan out in the EuroZone or the downdraft is going to be nasty.
On to 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.
BHI April 2012 $47 Puts
BHI continues to climb and is flirting with our initial resistance level. There’s still time to profit in this trade, as BHI shares remain below the important $52.50 level. Aggressive traders should continue holding. Resistance is at $52.50 and $55. Support remains at $45.
TGT April 2012 $50 Calls
TGT traded much higher this week. And the best part is, our calls reached an impressive 127% gain in the process! Looking ahead, TGT broke through its 200-day moving average. And with that hurdle cleared, we have a clear look at the $55 level. I expect the TGT rally to continue, so keep holding these calls. Resistance is at $55 and $60. Support is at $42.50 and $40.
GLD March 2012 $166 Calls
After a choppy week of trading, GLD is back up around the $170 level once again. With that, our options on the gold ETF are up more than 127%! The recent Fed decision seems to be helping most commodities, including gold. But that’s not all. Gold may be seeing higher prices due to its safe haven trade. Right now, the European debt crisis is a mess. And gold can provide a safe haven from a Euro meltdown. We’ve crossed the $170 resistance, so conservative investors should look to sell and lock in a profit. Our next resistance level is at $176. Support will be at $148 and at $140.
Category: EOT Update
