EOT Position Update – August 12, 2009

August 12, 2009

Market Snapshot

The market’s cooling off this week.

It’s no surprise, August typically sees a week or two of low volume trading.  They call ‘em the dog days of summer for a reason.  I know the 110+ degree heat in Arizona zaps my desire to do much of anything.

The good news is the pullback’s mild.  It isn’t more than a scratch on the 15% rally we’ve had in the S&P 500 over the last month.

The big news this week…

The unemployment rate ticked down for the first time since April ‘08.  The official reading of 9.4% is a fraction better than the 9.5% last month.

Don’t get too excited.  I’m not expecting miracles in the job market.  We still have a long way to go before we start adding more jobs than we’re losing.

I think this is another sign things are moving in the right direction.  There will be some bumps in the road along the way.  But all signs point to the economy bottoming soon (if it hasn’t already).

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.

  PEGA Dec 2009 $25 CALLS (PQMLE)
PEGA set a new peak return of 274% as the stock price continued to run after a stellar Q2 earnings report.  The stock has pulled back a bit, much like the overall market, but appears to be regaining some momentum.  Everyone but the most aggressive traders should have locked in profits already.

  GT Jan 2010 $20 CALLS (GTAD)
Goodyear’s held up well in the face of the market pullback.  We got the good news we were expecting from Congress.  They’re refueling the ‘Cash for Clunkers’ program with an additional $2 billion in funding.  This should boost demand for new cars (and tires) over the rest of ‘09.  Hold tight for now.  Resistance is at $22 and $25.  Support is at $14 and $12.

  MRO Oct 2009 $35 CALLS (MROJG)
MRO’s stuck in rut.  It all comes down to the price of oil.  And right now it’s bouncing between $60 and the mid-$70s per barrel.  We need oil prices to move beyond $75 per barrel in order to knock MRO out of its rut.  We still have some time for this to develop.  Hold tight for now.  Resistance is at $35 and $40.  Support is at $26 and $25.25.

Category: EOT Update