EOT Position Update – September 16, 2009

September 16, 2009

Market Snapshot

Another week’s gone by and surprise, surprise… The S&P 500’s up another 3%.

The market leaders are a trio of cyclical industries.  Technology, consumer discretionary, and industrials continue to post the biggest gains.  (We’re watching these industries closely for a new trade.  Why not take advantage of this trend… right?  Keep an eye out for a trade next week.)

The impressive gains are being fueled by positive economic data.

We’re being flooded with good news on a daily basis.  It’s been so good Fed Chairman Ben Bernanke said, “The recession’s over!”  (That’s great for our call options.)

The optimism has the market trading into overbought territory.  We’re looking for a small pullback so the markets can catch their breath.  However, markets in a strong uptrend can stay overbought for long periods of time.

In our opinion the markets should continue to rally, after a quick pause, into the Q3 earnings season kicking off in a few weeks.

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.

  ININ Dec 2009 $20 CALLS (NQXLD)
ININ is our latest trade we sent out on Monday.  It’s consolidating around $19.75.  It’s normal price action after a big run from the last few weeks.  I’m expecting the stock to regain its momentum once the 20-day moving average catches up to the current price.  Hold tight for the next big rally.  Resistance is at $22.25 and $25.  Support is at $16.50 and $14.

  MMM Jan 2010 $75 CALLS (MMMAO)
3M continues to move higher this week.  We blew through our first resistance level today.  Our options are showing a solid 40% gain.  We got more good news today. The volume of industrial output ticked higher by a better than expected 0.8%.  That can only mean good things for big manufacturers like 3M.  Aggressive traders should hold tight for another move higher.  The next resistance is at $80.  Support is at $65 and $60.

  UEPS Oct 2009 $17.50 CALLS (QBSJW)
Net1 shot beyond both of our resistance levels.  It’s currently riding the upper trend line higher.  Our peak gain of 267% is good enough to turn every $5,000 into $13,350!  Congratulations on a successful trade.  The stock should continue to trend higher from here.  Everyone but the most aggressive traders should have locked in gains already.

  GT Jan 2010 $20 CALLS (GTAD)
Goodyear stock jumped higher on Monday.  The US is imposing new taxes on cheap Chinese tires.  This is great news for the US tire makers.  It sets the stage for GT to be able to raise prices and increase margins.  Hold tight for now.  Resistance is at $22 and $25.  Support is at $14 and $12.

  MRO Oct 2009 $35 CALLS (MROJG)
This week is ‘do or die’ time for MRO.  The chart is looking very promising.  The stock is attempting to break through resistance at $33.60 for the fifth time in the last six months.  If it can close above $33.60, the odds are it will be heading toward our resistance levels quickly.  If the breakout fails, look to sell to conserve capital. Resistance is at $35 and $40.  Support is at $26 and $25.25.

Category: EOT Update