EOT Position Update – December 14, 2011

December 14, 2011

Market Snapshot

It’s like we’ve entered into another dimension!  A place where as soon as we think one thing, the opposite happens.

Once again, Europe’s at the center of the chaos.  This time the main event was the European Union Summit Meeting.

Investors had big expectations going into this highly anticipated two-day European meeting.  They were looking for a specific plan to resolve the ongoing European debt crisis.

However, all the market got was vague commentary from European Central Banks President Mario Draghi.  What’s more, he said the ECB wouldn’t support continued money printing to purchase European sovereign debt.

Let’s be honest, did you really think this would put an end to the crisis?

Stocks immediately rose after the treaty details emerged, but it didn’t take long for investors to notice the agreement does nothing to solve the current crisis.

The bottom line is Europe’s bailout fund is still insufficient.  If debt problems spread to the larger European economies, there’s no way to stop them from defaulting.

What’s more, Europe isn’t the only headwind.

Take a look at this chart of the S&P 500…

 

Right now, 1250 is the line in the sand.  But the S&P can’t hold the key technical level for any extended period of time.  As soon as the bulls seem to take charge, the bears come in saying, “Hold on, not so fast.”

The bottom line is, until Europe’s troubles are settled and the S&P can hold 1250, any rally is likely to be short lived.

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.

  TRV April 2012 $60 Calls
TRV is our newest trade.  Our call options are down a few cents since our trade alert went out last Friday.  This looks like a great buying opportunity to me.  TRV just announced a new “Guide to Better Coverage” to help people better evaluate their insurance needs.  TRV has also been holding up nicely during this wild market.  Go ahead and buy these calls up to $2.00.  Resistance is at $57.50 and $61.00.  Support is at $54.00 and $49.00.

  DNKN March 2012 $22.50 Puts
DNKN’s stock is up a few cents to $25.15 since our recommendation.  But they’re still facing stiff competition.  And insiders are continuing to sell their shares.  I would say the company is still facing strong headwinds.  With four months to expiration, we still have plenty of time.  Continue holding… resistance is at $27.50 and $29.00.  Support is at $20.00 and $19.00.

  PLCE January 2012 $50 Puts
PLCE is getting very close to our $58 resistance level.  In addition, PLCE was recently upgraded by three rating agencies.  For these reasons, we’ve seen some juice taken out of our puts.  With January expiration approaching, let’s sell these options now to preserve capital.

   NFX January 2012 $50 Calls
NFX has given back all of our gains after they signed the crude oil supply agreement with Tesoro (TSO).  It’s not NFX’s fault.  Most energy-related stocks have taken it on the chin this past week.  The good news is… NFX is on an uptrend since the October low.  If NFX can mount an about face this week, we could see our options come back nicely.  Continue holding.  Resistance is at $51.00 and $56.00.  The next support is at $35.00.

Category: EOT Update