EOT Position Update – April 9, 2008
April 9, 2008
Market Snapshot
The Dow Jones Industrial Average closed at 12527. After last week’s amazing gains, the Dow slipped four days in a row.
This week the news has been dominated by news of the Microsoft takeover of Yahoo. The “friendly” overture by MSFT is quickly spiraling into a knock down drag out fight. It will be interesting to see how this new project of Steve Ballmer’s turns out.
This week market talk was focused on earnings. Alcoa kicked the party off with falling earnings on higher costs . . . and they blamed the weak dollar. Oil traded above $111 per barrel.
Watch your e-mail closely as this is a great time to initiate options trades . . . and capture big movements.
Now for the trade updates.
Position Updates
APA May 2008 $135 Calls (APAEX)
Just two days ago we recommended this trade. Everyone should have had plenty of time to get in on it. I believe that as oil prices move higher so will Apache. Resistance is 135 and 140. Support is 120 and 110.
CBI May 2008 $45 Calls (CBIEI)
This week CBI traded up to $48 then retreated to the 45 level. We’re basically flat on the trade so far . . . hang on though, I expect CBI to trade higher. Resistance is $50 and $52.50. Support is $42.50 and $40.
RRC May 2008 $65 Calls (RRCEM)
Monday RRC crossed above $69.50. After moving beyond the first resistance level, some of you have taken profits. We’re very close to the next resistance level of $70. You might consider sitting tight as we still have some time on these options. Support levels are $57 and $54.
COP May 2008 $75 Calls (COPEO)
COP broke through our first support level this week. The stock crossed above $80 today, before closing at $79.43. The next resistance level is $85. Support is $70 and $67.50.
NSC June 2008 $55 Calls (NSCFK)
Over the last week NSC traded though the first resistance level. We eventually hit 57.75. Unfortunately we promptly gave back our hard earned ground, closing under 55 today. It was painful. Those of you who exited at the first resistance level – congratulations on a great trade. Resistance is $56.50 and $58.50. Support is $49 and $47.
Parting Shots…
Important news events
Over the next week we are going to see a number of important economic announcements. Positive economic news should drive the markets higher over the next few weeks. Here are a few to be on the lookout for.
Friday April 11 . . . University of Michigan Consumer Confidence. This set of economic data is a survey of consumers. It’s considered an early economic indicator of the direction the economy is taking.
Tuesday April 15 . . . Producer Price Index. This index measures changes in selling prices for goods and services. If the PPI moves upward it indicates that inflationary pressures are impacting the economy.
Wednesday April 16 . . . Consumer Price Index. The CPI tracks the changes in cost of living. An increasing CPI number is seen as being inflationary.
At the end of this month the Federal Reserve is meeting to determine interest rates. These data points are very important as they may signal the direction of the Fed movement and the economy.
Category: EOT Update
