EOT position update September 3, 2014
September 3, 2014
Market Snapshot
I hope you had a great summer.
It’s time for the kids to go back to school and for football season to add some drama to our lives. Because the recent stock market action has been anything but dramatic.
For the most part, the S&P 500 has marched steadily higher despite some geopolitical drama over the summer. And that’s just fine with me!
We’ve seen strength out of several different sectors and industries within those sectors throughout the summer. Lately the financial sector has taken on more of a leadership role.
That’s a good sign for the health of the bull market. There are many investors who firmly believe a bull market can’t last unless financial stocks are participating in the rally.
Over the last quarter, financials, health care, and technology stocks have been the top performing sectors. So investors should have no fears about this rally fading due to the lack of participation by financials.
What’s more, US economic data is still in the Goldilocks range… it’s not too hot and not too cold.
Just last week we saw good news like an upward revision to 2nd quarter GDP to an annualized rate of 4.2% as companies invested in their businesses faster than expected and consumer confidence jumped to its highest level in seven years!
But that news was tempered by slower than expected new home sales, a drop in consumer spending, weaker than expected income growth, and tame inflation data.
That’s a sustainable trajectory for the US economy and one that should continue to lift revenues and earnings as well as create jobs and fuel economic growth.
In short, the bull market for US stocks is showing no signs of coming to an end anytime soon.
And one more thing, keep an eye out 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.
BDBD December 19th 2014 $12.50 Calls
BDBD is now up 5.7% since we recommended buying call options on it a few weeks ago. The combination of an improving fundamental picture and a bullish technical setup has helped drive the value of our call option 35% higher. Continue holding for the next leg higher… Resistance is at $15.00 and $17.50. Support is at $12.00 and $11.00.
ADI September 19th 2014 $50 Calls
ADI’s disappointing forward guidance has derailed this trade for aggressive traders that didn’t take the 90% gain when it hit the first resistance level. The good news is our call option is in-the-money and still has quite a bit of value left. I don’t see a lot of upside for this option between now and when it expires in a few weeks. The best you can hope for is to get back to even on this trade… but I’d rather cut it loose now to conserve capital.
TPLM October 2014 $12.50 Calls
TPLM is hanging around the recent highs around $12.00. The stock is in a solid long-term uptrend and has a potential catalyst from the sale of one of the company’s units coming down the pipe. We still have six weeks until these options expire. Continue holding… Resistance is at $14.00 and $17.50. Support is at $10.00.
Category: EOT Update
