EOT Position Update – June 24, 2009

June 24, 2009

Market Snapshot

The stock market continues to trade in a tight range.  The S&P 500 is stuck between 880 and 940.  And it’s been there for almost two months.

The good news is the 200-day moving average is providing strong support.  It should keep stocks from any further dramatic price declines.

Right now, investors are in a wait and see mode.

They’re waiting for economic data to confirm a recovery is actually happening.  But here’s the problem.  We’re getting mixed signals.  Just today, the housing market data came in worse than expected, but orders for durable goods came in better than expected!?!

It’s telling me the economy is still in the bottoming phase.

So far, the data isn’t showing us a clear picture of what a recovery will look like.  The question remains.  Will the economy rebound in grand fashion?  Or will we plod along with little (or no) growth for years?

Right now there’s no way to tell.

But one thing is clear.  Economic data is the only story that matters right now.

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.

  BRLI August 2009 $35 CALLS (BJQHG)
Bio Reference Labs is taking a breather after rocketing higher over the last month.  I’m expecting the next leg up to come once the 20-day moving average catches up to the current price.  Resistance at $36.80 and $40.  Support is at $31.75 and $27.

  AAN November 2009 $40 CALLS (AANKH)
Aaron’s is in a holding pattern right now.  We’re waiting on the next quarterly earnings announcement.  It’s due in mid-July.  I’m expecting them to beat estimates.  Hold tight for the release.  Resistance at $37 and $42.  Support is at $28 and $26.25.

  MRO October 2009 $35 CALLS (MROJG)
Oil prices have slid back under $70 per barrel on demand concerns.  But don’t panic. Demand numbers are volatile in the short term.  The overriding trend is increasing demand and declining supply.  This means higher oil prices ahead.  We still have plenty of time for this trade to develop.  Resistance at $35 and $40.  Support is at $26 and $25.25.

  INTC October 2009 $16 CALLS (NQJQ)
Great news for Intel this week.  They inked a deal with cell phone maker Nokia.  This deal gives Intel access to the fast growing smartphone market.  Hold tight for Intel’s next move higher.  Resistance at $16.80 and $19.  Support is at $14 and $12.75.

Parting Shots…

Social Unrest in Iran

The recent sham of an election in Iran has set the revolutionary wheels in motion.  The video of protestors taking to the streets is quite a sight.

In typical dictatorship style, the regime is crushing the protests with brutal violence.

I’m not surprised.  This is what happens any time power and money is concentrated into the hands of a few.  They’ll go to extremes to protect it – even killing innocent women and children.

More than likely, nothing will change because of the recent protests.  However, the revolutionaries may only need to wait a few years to make their dreams a reality.

What’s coming down the pipeline that could trigger a revolution?

Iran is running out of oil.  In fact, it’s estimated that the country will export $0 worth of oil by 2014.  When the oil money runs dry, the regime won’t have money to pay the secret police to stamp out the seeds of rebellion.

Iranian revolution may be a foregone conclusion… but it won’t happen ‘til the oil runs dry.

Category: EOT Update