EOT Position Update – December 8, 2010

December 8, 2010

Market Snapshot

The Santa Claus Rally hit Wall Street early this year.

The charge is being led by the small and mid cap stocks.  They’re solidly outperforming large cap stocks so far this month.

This is a clear sign investors are turning even more bullish.

And speaking of bullish…

Goldman Sachs released their 2011 economic forecast this week.  They believe the S&P 500 will gain 25% next year.  That’s a huge gain any way you slice it…

They cited the same things I’ve been pointing to for months now… strong corporate profits, easy monetary policies, and an improving U.S. economy.

They pointed to large US commercial banks as their “Top Trade for 2011”.  Not surprisingly, we’ve seen financial stocks take on a market leadership role the last few days.

The bottom line is… stocks are in a bull market.  And that’s great news for our call options!

Keep an eye on your email for a new trade later this week.

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.

  CNH June 2011 $55 Calls
CNH is breaking out to new 52-week highs.  And our option hit a new peak gain of 37% today.  It’s a great start but the best is yet to come.  Sales of agricultural equipment are surging worldwide and the 4th quarter should be the best yet.  Hold tight for further gains.  Resistance is at $54 and $60.  Support is at $35 and $31.50.

  DRQ March 2011 $85 Calls
DRQ’s potent rally continues… Our option hit a peak gain of 164% yesterday as oil surged to $90 per barrel.  Aggressive traders should continue holding for bigger gains ahead.  The next resistance is at $90.  Support is at $62 and $57.

  CBU February 2011 $22.50 Calls
CBU is rampaging higher.  Financial stocks are finally showing some leadership after lagging the market for months.  We’ve cleared our first resistance level at $25.25. Congratulations to everyone locking in a solid 79% gain.  The next resistance is at $27.  Support is at $21 and $20.

  PEGA March 2011 $25 Calls
PEGA came within 5 cents of hitting our $35 resistance level today.  Aggressive traders may want to go ahead and lock in your massive 473% gains!  I still like PEGA over the long haul but it’s running into resistance of highs it set back in June and July.  Congratulations on a huge winner.

Category: EOT Update