EOT position update April 2, 2014

April 2, 2014

Market Snapshot

The first quarter of 2014 hasn’t been great for the stock market.  The S&P 500 is up a mere 0.5%.  But it’s also within 1% of the all-time high.  So, it’s not the end of the world either.

As the quarter comes to an end, there are some very important changes taking place.

Right now, there’s a rotation out of high-flying sectors like biotech and many of the momentum stocks that have been the big winners over the last year.  It’s why we’ve seen the Nasdaq drop 3% off the highs while the S&P 500 is nearly unchanged.

As high-flying momentum stocks fall out of favor with investors, cyclical sectors and sectors with cheaper valuations have been on the upswing.

Here’s the thing…

We knew this would happen at some point.  The market moves in cycles.  Sometimes growth and momentum lead the way.  At other times, cyclical stocks are hot.  And at others, value and cheap stocks take the lead.

The bottom line is there are always opportunities to use options to turn a 5% or 10% move in a stock into 50% or 100% gainers.  And I’ll do my best to keep us out in front of the changes.

In fact, I’m working on a new trade right now.  Keep an eye on your inbox 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.

GMCR May 2014 $90 Puts
GMCR’s decline held up at $105 as it touched the previous low and the 50-day moving average.  But the downtrend off the February high is still firmly entrenched.  Look for a break below the 50-day moving average to trigger a much bigger move to the downside.  Support is at $90.00 and $80.00.  Resistance is at $110.00 and $115.00.

Category: EOT Update