EOT Position Update – September 30, 2015
Market Snapshot
It’s not even October and I’m already seeing Thanksgiving items are for sale at the grocery store… Christmas isn’t far behind and soon 2015 will be history.
How stocks finish the year is still very much up in the air.
Right now we are seeing an escalation of the fears that triggered the correction in US stocks and sent many global stock markets careening into bear market territory.
Commodity prices are falling. This is having a negative impact on natural resource stocks and heavy equipment manufacturers like Caterpillar $CAT.
This is primarily due to the slumping demand for basic materials in China. And the most recent manufacturing data out of China shows their Flash PMI slumped to a 78-month low in August.
Slowing growth in China is clearly the biggest threat to the global economy right now. That hasn’t changed for months. But we’ve also seen a new batch of problems for US stocks pop up recently.
The two getting talked about the most are the Volkswagen’s emissions scandal and the pharmaceutical company that raised the price of one of their widely used drugs by 5,000% overnight.
This promptly brought politicians into the conversation with talks of massive fines and penalties and new stricter regulations for the car and drug industries.
What’s more, the Fed is still talking about a rate hike sometime in 2015 despite all of the headwinds and red flags. Investors took these cues and promptly sent the S&P 500 back near the recent lows.
Let’s move onto the updates…
Position Updates
Just a quick note: Remember, we won’t update every open position every week. We try to focus on the positions that have some significant news or price movement.
AAPL November 20th 2015 $120 Calls
Our call option on AAPL hit a new high in the days after we recommended the option. And the new Apple iPhone 6s launch was a huge success. They set a new record of more than 13 million phones sold in the first weekend. Last year Apple sold about 10 million iPhone 6 and 6 Plus in the first weekend. Since then, the stock price has slipped lower as the overall market slipped back toward the recent lows. Apple is currently flirting with our $109 support level. Conservative traders should sell to conserve capital on the first close below $109. The bright side is Apple is well positioned to shake off the market weakness and surge higher if the negative mood on Wall Street improves. Support is at $109.00 and again at $105.00. Resistance is at $120.00 and $130.00.
MAR October 16th 2015 $72.50 Puts
MAR made another run at our $65 support level this week. Our option skyrocketed up 89% to $5.10. Conservative traders have already locked in their gains on this trade. This option is solidly in-the-money. Aggressive traders should look to exit this trade in the coming weeks. Support is at $65.00. Resistance is at $73.00 and $74.00.
Category: EOT Update
