eot-position-update-September-24-2014
September 24, 2014
Market Snapshot
Historically, this week is the worst week of the year for stocks.
It’s an unusual phenomenon in the seasonality of stock prices. For one reason or another, the end of September and beginning of October is typically weak and this week is the worst of them all.
That being said, the minor correction in the S&P 500 over the last week isn’t anything to be afraid of. Right now, the large cap index is only 1.5% off the 52-week high.
The biggest story is the strength of the US Dollar.
The action of the Fed and the other central banks around the world has combined to cause the US Dollar to strengthen versus other global currencies. This is causing weakness in US stocks like industrials, energy, and materials that are hurt by a strong dollar.
I think the US Dollar has reached an inflection point. Based on some of the long term charts of the US Dollar, I believe we’ll see the US Dollar begin to weaken.
That should allow the sectors that have been hit the hardest by the strong US Dollar to rebound as the US Dollar weakens in the weeks ahead.
Needless to say, the S&P 500 needs to have the industrial, energy, and materials sectors engaged if it is going to make another new high.
This setup should create a nice opportunity for a new trade… so keep an eye on your email for a new trade later this week.
Let’s move onto 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.
AAPL October 17th 2014 $105 Calls
AAPL has held up well as the markets have sold off over the last week. And the launch of the iPhone 6 is building bullish sentiment that should help push the stock toward our target… Resistance is at $105.00 and $110.00. Support is at $95.00 and $94.00.
BDBD December 19th 2014 $12.50 Calls
BDBD has pulled back along with the overall market this week. The good news is an uptrend is emerging from the recent price action after the reversal off the August lows. That’s good news for aggressive traders looking to hit a home run on this trade. With three months until these options expire, there’s plenty of time for BDBD to reach the next resistance at $17.50. Support is at $12.00 and $11.00.
TPLM October 2014 $12.50 Calls
TPLM has fought off the headwinds of a strengthening US Dollar. But the stock remains undervalued and unloved by the market. I simply don’t see how a stock with these fundamentals trades below $14.00, if not for $20.00 per share. If the US Dollar does weaken, we should see investors take a look at stocks like TPLM that offer tremendous upside. Continue holding… Resistance is at $14.00 and $17.50. Support is at $10.00.
Category: EOT Update
