EOT Position Update – August 19, 2009

August 19, 2009

Market Snapshot

It’s the dog days of summer… and the markets are kicking back and relaxing.

The last few weeks of August are vacation time on Wall Street.  Most of the senior traders are out of town.  They’ve all gone to the beach or an island for some R&R. They’ve left the trading desks to the junior traders.  Just look at the lower volumes on all of the exchanges.

It means we can’t take market action at face value.  We need data to back up any emerging trends.

But right now there’s little if any news hitting the markets right now.  (That’s why all the senior traders are on vacation right now.)

The last market moving news came from the Q2 earnings season.  And it’s over for all of the Dow stocks and other market leaders.

What I’m telling you is the markets are going nowhere fast… Of course, there’s always the chance earth shattering economic data comes across the wire.  But it’s not likely.

The only news worth mentioning today is the sharp run up in oil prices today.

Inventory levels fell by 8.4 million barrels this week.  Mostly due to supply cut backs. But demand is still down.  In my opinion, this is scary situation.  The economy is just beginning to turn the corner.  Once growth kicks in, there’s going to be increased demand for oil.  It doesn’t take much to see lower supply and increasing demand equals spiking oil prices.

With the indecisive trading action going on in the markets, we’re keeping close tabs on it.  Once a new trend emerges, we’ll get a new trade out.

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.

  UEPS Oct 2009 $17.50 CALLS (QBSJW) 
Net1 is a new trade we sent out today.  For more details, take a look at the trade alert.  Resistance is at $18.50 and $20.25.  Support is at $13.50 and $12.

  GT Jan 2010 $20 CALLS (GTAD)
Goodyear continues to trade flat while the markets chop around.  They’re working on restructuring their costs.  Right now they’re in contract negotiations with 10,000 steelworkers’ union employees.  Their cost cutting measures should boost earnings in Q3.  Hold tight for now.  Resistance is at $22 and $25.  Support is at $14 and $12.

  MRO Oct 2009 $35 CALLS (MROJG)
The lower inventory levels have oil prices moving higher.  Right now it’s all about production cut backs.  But demand should pick up as the economy recovers.  This is a potentially explosive situation for oil prices.  We still have a few months for this to develop.  Hold tight for now.  Resistance is at $35 and $40.  Support is at $26 and $25.25.

Category: EOT Update