EOT Position Update – August 1, 2012
August 1, 2012
Market Snapshot
It was a quiet week in the indices as they continued to digest gains from last week and rest ahead of big central bank decisions later this week.
The main focus for the rest of the week is the Federal Reserve’s decision on Wednesday at 2:15 p.m. EDT, followed by the European Central Bank meeting on Thursday and the jobs report on Friday.
At the end of last week, the market rallied on expectations for Fed and ECB action.
Now the question is, will traders fire the bazooka when the S&P 500 is less than 3% off yearly highs?
It’s hard to believe they will.
So, what’s happening on the fundamental side?
For one, crude oil is on the decline again. For the last few days, it’s been making small legs lower. Today it closed down another few percent again.
Stocks in general are a bit of a mixed bag right now.
However, the last few days, notable action was from market leader Apple (AAPL) as the stock continued its climb above $600.
On the other hand, high-end retail has also been in focus, underperforming as Coach(COH) got pounded after reporting that it missed its earnings estimates.
Finally, it’s important to remember that earnings season is beginning to slow down with only a few more notable companies to release earnings.
And August trading is typically the slowest month of the year.
Now, how about on the technical side?
This market is certainly frustrating traders.
There has been plenty of movement in stocks, but without an overall trend, making it hard to capitalize on the action.
From last week’s lows to this week’s highs, the S&P 500 rallied more than 60 points.
Upper-level consolidation or digestion would be healthy if this rally is to hold going forward. Key levels include 1,375, which is support. If it holds, it will prove this market is very strong.
But if it breaks down below around 1,360-1,362, it could spell trouble.
Bottom line…
We are defiantly awaiting a catalyst with the markets here.
We can go either direction from this point in the S&P, it just depends on how the news is digested. The markets have priced in some optimism here, the majority of which came on the rally we saw late last week.
Technically we look to have started a pullback from last week’s high. This would be safe to say if not for today’s and Thursday’s events.
We, like everyone else, will wait and watch.
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.
SLB August 2012 $67.50 Calls
Schlumberger had a huge week. Congratulations to everyone who took profits of at least 247%! As you’ve seen, SLB acted exactly like we wanted it to and has broken out past both resistance levels. If you are still holding options in this name, keep a close eye. This will be our last update on this huge winner.
LAZ September 2012 $25 Calls
LAZ is our newest trade. And with the market very volatile right now, our call options have moved higher as banking premiums have risen in lockstep with the sector. Congratulations again, our calls are sitting on a 111% gain. However, we are very close to our first resistance level of $27. Conservative investors should get ready to exit on one more push higher. As far as aggressive investors, we’re holding LAZ for some larger gains. Remember, we want LAZ to move higher. Resistance is at $27.00 and $29.00, while support is at $22.50 and again at $21.50.
Category: EOT Update
