EOT Position Update – February 29, 2012
February 29, 2012
Market Snapshot
Economic Data Sends The Rally Into Overdrive…
As expected, both the Dow and S&P are now trading at not only new 52-week highs, but multi-year highs as well!
Tuesday, the DJIA was able to hold a close above 13,000 for the first time since May 2008. And the S&P closed above 1,371… again a level not seen since early May 2008.
Last week, it looked as if critical resistance levels might just keep the averages from heading higher. But with this much upward momentum, it’s hard to keep buyers from piling in.
There’s no doubt momentum has certainly helped, but it’s really the latest economic data that did the trick…
On Tuesday, the Consumer Confidence report blew away the analysts estimates of 64.0… and turned in a 70.8 reading!
The upbeat report came from the recent improvement we’re seeing in the jobs market. Apparently the strength in job activity is showing a renewed optimism for income potential. Also, those surveyed are describing jobs as easier to find than in months past.
By and large, strong economic data continues to flow in the US.
In fact, the Commerce Department released real GDP for the fourth quarter of 2011 today. And just like the consumer confidence reading, GDP growth beat analysts’ estimates… coming in at 3.0%. Analysts expected an unrevised 2.8% number, but were pleasantly surprised as GDP growth reached the psychologically important 3 handle.
With the US economy back in the swing of things, we could see this rally run for quite some time.
One word of caution here… there are two potentially negative catalysts out there right now. First, we could see a hiccup in the Greek bailout deal. If something were to go awry with the debt restructuring in the next few weeks, we could see the markets sell off.
Also, excessively high oil prices could hamper the rally. If we see things heat up again in the Middle East, oil has the potential to eclipse the $110 level in no time. And that could slow down growth in the US.
We’re keeping a close eye on all the events in both the US and abroad. And we’ll be ready to move as soon as conditions change.
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.
MRO July 2012 $36 Calls
Marathon is trading down $1 since our recommendation. Shares took a hit today after being downgraded to Hold from Buy at Deutsche Bank. We have lots of time for this trade to unfold. Unrest in the Middle East is far from resolved, and with the very next escalation, we should see oil prices spike yet again. Remember, we want this stock to move higher. Resistance is at $42 and again at $50. Support will be at $30 and $27.50.
GRPN April 2012 $21 Puts
Groupon is trading in a tight range right now. The stock is potentially gearing up to break higher or lower at anytime. For now, our puts trade back near our buy price as volatility starts to come out of the option. Remember, we want this stock to move lower. Support levels will be at $18 and $15. Resistance levels will be at $23 and again at $26.
TGT April 2012 $50 Calls
Target is simply on fire lately. As a result, our calls jumped to give us a massive 351% today! While TGT shares show no sign of stopping, we have reached our initial resistance of $55. As such conservative investors should sell for a sweet 351% profit! Once again, we want this stock to move higher. Resistance remains at $60. Support is at $42.50 and $40.
Category: EOT Update
