EOT Position Update – April 7, 2010

April 7, 2010

Market Snapshot

The stock market continues its unbelievable run.  It seems like the S&P 500, NASDAQ, and the Dow are all hitting new 52-week highs on a daily basis.

Not wanting to be left out of the party, small and mid-cap stocks are also hitting new highs.

In fact, the small and mid-caps have easily outgained large cap stocks so far this year.  I think leadership out of the smaller stocks is a good sign that the market’s advance will continue.

It looks like investors will continue to bid stocks up as long as the economy shows signs of improvement.  And the latest round of economic data added more fuel to this fire.

But that doesn’t mean the markets are going to continue climbing straight up.  More than likely, the markets will make some sort of short term correction before resuming their upward trend.

I see a short term pullback based on technical analysis.  The two month rally is very extended and looking severely overbought.

And to top it off, the S&P 500 is bumping into resistance at 1,190 and 1,225.  And the Dow has yet to clear resistance at 11,000.

Now the reality is markets can stay overbought and overextended for long periods.  So trying to pick a short term top is almost impossible.

The bottom line is I expect the markets, especially tech, to be much higher over the next few months.  But the odds favor a short term pullback before it moves much higher.

Now for 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.

  CTSH October 2010 $60 CALLS
CTSH is a new trade we sent out earlier today.  Take a look at the trade alert email or the website for more details.  Resistance is at $55 and $60.  Support is at $49 and $47.50.

  ASEI July 2010 $85 CALLS
ASEI continues to consolidate just above two support lines.  The first is the long term uptrend.  The other is the opening gap higher on December 28th.  Generally, the longer the consolidation, the more powerful the breakout… This consolidation is now entering its ninth week.  All signs are pointing toward a powerful move in the near future.  Hold tight for now.  Resistance is at $82.25 and $87.  Support is at $72.75 and $70.

  WFR July 2010 $13 CALLS 
WFR continues to trend higher.  Our option hit a new peak gain of 117%!  WFR is benefiting from a renewed interest in solar company stocks.  Aggressive traders should hold tight for bigger gains ahead.  The next resistance level is $17.  Support is at $11.50 and $11.

  VZ July 2010 $30 CALLS
VZ hit a new high this week on rumors Apple’s (AAPL) next version of the iPhone will be available on the Verizon Wireless network.  Today, VZ has pulled back on concerns over VZ profitability over the next few quarters.  Our July call options still give aggressive traders plenty of time for another leg higher.  The next resistance is at $33.  Support is at $28 and $27.

  INTC July 2010 $20 CALLS
INTC continues to consolidate near it 52-week high.  Management will report Q1 earnings next week.  Aggressive traders should hold out for bigger gains ahead.  The next resistance is at $25.  Support is at $18.50 and $18.

  SWKS May 2010 $15 CALLS
SWKS has pulled back to support of the 20-day moving average this week.  But it’s still in a solid uptrend.  There’s still plenty of upside potential for SWKS as one of the key suppliers for Apple’s iPhone and the new iPad.  Aggressive traders should hold tight for quarterly earnings release later this month.  The next resistance is at $18.  Support is at $12.25 and $11.50.

Category: EOT Update