EOT position update April 9, 2014
April 9, 2014
Market Snapshot
It’s been a tumultuous week for the stock market.
The S&P 500 has been up and down and around but hasn’t gone anywhere this year.
Last week the S&P surged 3% higher to hit a new all time high of 1,897 on Friday. But the rally evaporated quickly after weaker than expected payroll data gave investors a reason to hit the sell button.
Once again, we saw high flying growth stocks take the brunt of the hit. But some of the cyclical stocks that are dependent on an uptick in economic activity dropped as well. Value and defensive stocks held up better than the rest.
Today, investors got what they were looking for from the Fed minutes.
In short, they said interest rates will likely rise slower than what many had been led to believe. There wasn’t a hint of anything confirming Janet Yellen’s remark that the Fed could begin to raise interest rates around six months after QE ends.
Once again, investors are overreacting to any piece of information that comes out during the lull before quarterly earnings season. There’s just not much information to go on in the weeks leading up to earnings.
But that will change quickly as earnings season kicks into high gear this week. The rise or fall of each stock now resides in the company’s ability to meet, exceed, or fall short of expectations.
These earnings-related plays should present us with some good opportunities to generate some profits in the weeks ahead.
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.
APA May 2014 $85 Calls
APA’s breakout from a failed head and shoulder pattern didn’t hold up as stocks sold off. And today an analyst from Deutsche Bank downgraded the stock from buy to hold. But he still has a price target of $91 on the stock. I guess that’s just not enough upside from $85 where it trades currently to keep his buy rating on the stock. The good news is APA bounced back strongly after the Fed minutes were released. If it can reclaim $85 in the next few days, we could still see APA make a run at our resistance levels in the weeks ahead. Continue holding… Support is at $80.00 and $77.50. Resistance is at $90.00 and $94.00.
GMCR May 2014 $90 Puts
GMCR broke below the 50-day moving average as stocks tumbled lower last Friday. The stock fell below $101 yesterday… the lowest price since February 2nd. The intermediate term trend for this stock is down. And I still think we could see the gap get filled before the trend changes. Continue holding… Support is at $90.00 and $80.00. Resistance is at $110.00 and $115.00.
Category: EOT Update
