EOT Position Update – April 25, 2012

| April 25, 2012

April 25, 2012

Market Snapshot

Back and forth the markets go.

One day it starts positive and closes negative.  The next day it starts negative and closes positive.

Yesterday… the market went up, then came down before ending in the middle of the day’s range.

That’ll drive anyone crazy!

Now, with more than 50% of the S&P 500 having reported earnings, we’re at a critical inflection point.

The mighty tech sector… earnings is beginning to be of concern. Frustration for traders is mounting with this quarter’s earnings.

We’ve seen an area of weakness with Netflix (NFLX) and Qualcomm (QCOM) tanking following its first-quarter numbers, as well as Symantec (SYMC) losing ground because of a below-consensus outlook.

On the other hand, Microsoft (MSFT) is on the upswing and Apple (AAPL) is soaring. This has put the Nasdaq in a tug of war with no winners emerging.

Here’s the thing… we still need to see more earnings and economic data before we are able to get more market clarity.

As I’ve been writing for the last few weeks, economic data is the key to longer term investment clarity.  Unfortunately, it’s not good yet.

Let’s take a look at two important pieces of recently released economic data…

The economic news in general has been softening. Yesterday, consumer confidence was pretty much flat, down five tenths to 69.2 in April.  However, details of this report are being interpreted as less optimism for the employment outlook and a little less optimism on consumer income.

In addition, this number was the lowest number since October.  Not a very good sign people are feeling better about the US economy.

Next front and center in the news… is the housing market getting better?

The answer, no.

Here’s the problem… the trend.

From month to month (February to March 2012), slippage is occurring in three important housing numbers.  New home sales are down 7%, existing home sales are down 3%, and housing starts are down 6%.

So, even though realtors are reporting strong traffic, the census numbers are certainly painting a different picture.

The fact is, we need to be careful here…

It seems that we’re feeling pretty comfortable around this 1375-1390 level in the S&P 500.  And this is where we’ll continue to address our current positions as necessary.

But we will add both bearish and bullish trades as they present themselves.

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.

  CLNE June 2012 $19 Puts
Clean Energy Fuels has plummeted since our recommendation.  We’re up a whopping 157%!  Our thinking here has been spot on.  As natural gas prices have continued to fall, so has CLNE.  And it still continues.  We’ve got plenty of time until expiration and until natural gas turns, we’ll hold this trade for larger gains.  Remember, we want this stock to fall.  Resistance remains is at $24.50 and $25.50.  Support is at $17.50 and $16.50.

  CF Industries May 2012 $195 Calls
CF Industries has been on a little rollercoaster ride lately.  When we recommended it last week, it was trading at $186.20 a share and today it’s at $189.50.  Our call options are about even due to time-decay.  However, a little secret, earnings is scheduled for the first week in May.  And I see no reason to do anything here. However, we’ll update this name again next week since it’s a May expiration. Remember, we want this stock to continue to rise in price.  Resistance is at $210 and $215.  Support is at $180 and $172.

Category: EOT Update

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