EOT Position Update – October 28, 2009
October 28, 2009
Market Snapshot
After some unusually warm temperatures the last few weeks, it’s finally cooling off in the desert. Unfortunately, the stock market is too.
The question on everyone’s mind… Is this the beginning of a major correction or just another pullback as the market stair steps its way higher?
There’s no doubt about it, something is amiss. Q3 earnings reports have come in better than expected for the most part. In fact, 81% of the S&P 500 stocks that have already reported had better than expected earnings.
The problem is the better than expected earnings haven’t delivered the same ‘pop’ they did in the first two quarters of ‘09. And when stocks did jump higher on earnings, they’ve gone on to give back most of the gains over the next few days.
To make matters worse, the sectors that led the market rally since March are now showing weakness. The financial, tech, transportation, and small cap stocks have begun to lag behind the S&P 500.
While these results are very disappointing, there’s still hope.
The three major indices are still holding above the 50-day moving average. This level has been a strong floor of support since March. If support holds at this level, the uptrend is still intact. I wouldn’t be surprised to see the market stage a big rally if this support level holds.
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.
MCRS Mar 2010 $30 CALLS (MFKCF)
MCRS has pulled back with the rest of the market. They’ll report earnings tomorrow after the markets close. Hold tight for the earnings report. Resistance is at $30.50 and $33. Support is at $25 and $22.50.
TMO Dec 2009 $45 CALLS (TMOLI)
TMO’s earnings met analysts’ expectations for the third quarter. They also said their full year earnings would be in line with expectations. The stock has pulled back with the rest of the market. Aggressive traders should wait to see if the market can regain its momentum. The next resistance is at $50. Support is at $41.50 and $38.50.
TQNT Feb 2010 $7.50 CALLS (TQNBU)
TQNT met analysts’ expectations for their third quarter earnings. However, they raised concerns for the fourth quarter. Apparently one of their big customers, a South Korean mobile phone maker, may cut back new orders. If they do, it will take a toll on TQNT’s revenue. The stock has traded down through both of our support levels. Only the most aggressive traders should still be holding these options.
ININ Dec 2009 $20 CALLS (NQXLD)
ININ jumped a few weeks ago when management said their third quarter would be better than expected. This week they gave their full report. They said their full year earnings would be in line with analysts’ estimates. The news certainly took the wind out of ININ’s sails. Aggressive traders may want to hold on to see if the market can regain its momentum. The next resistance is at $25. Support is at $16.50 and $14.
MMM Jan 2010 $75 CALLS (MMMAO)
3M reported a better than expected third quarter. The stock jumped higher on the news the next day. And just like many of the other companies who beat analysts’ expectations, the stock has gone on to give back all of those gains over the next few days. Aggressive traders still holding these options may want hold on to see if the market can regain its momentum. The next resistance is at $80. Support is at $65 and $60.
GT Jan 2010 $20 CALLS (GTAD)
GT swung to a profit in the third quarter. But the news was overshadowed by weak North American sales. The stock has broken below its seven month uptrend. Look to conserve capital and sell into any strength.
Category: EOT Update
