EOT Position Update – April 29, 2015

| April 29, 2015

Market Snapshot 

Over the last week, quarterly earnings have taken center stage.

So far, more than 66% of the companies reporting earnings have beaten expectations.  The upbeat earnings pushed the S&P 500 to a new all-time high on Friday.

Technology and consumer discretionary stocks were the best performing stocks last week.  But the S&P 500 isn’t the only stock index making new highs.  After 15 years, the Nasdaq and the Japanese Nikkei also returned to all-time highs last week.

Even emerging market stocks have been showing strength recently as the US Dollar has weakened over the last few weeks.

Needless to say, things were looking up.

The S&P 500 had made a new high for the first time in months, the Nasdaq and Japanese stocks were at a new highs, and even emerging markets were trending higher.

Everything looked good in the rearview mirror.

But this week, investors have slammed head on into the current and future economic conditions.

The US economy only grew at a pace of 0.2% in the first quarter and the Fed was forced to downgrade their assessment of the economy.  Their first rate hike will likely be pushed out until at least the third quarter.

I’ve said this was going to happen all along.

But here’s the thing…  

The economy doesn’t always dictate the direction stocks move.  So, it doesn’t mean stocks are due for a big correction just because the economy is weaker than expected.

Remember, the S&P 500 is still in an uptrend, interest rates are low, and the market is flooded with money looking for a place it can earn a return.

These factors will likely keep the S&P 500 in the same volatile range-bound action that we have seen over the last few months.

Let’s move onto the updates…


Position Updates

Just a quick note:  Remember, we won’t update every open position every week.  We try to focus on the positions that have some significant news or price movement.

 CBT June 19th 2015 $45 Calls

CBT reported quarterly earnings today.  The results were a bit disappointing, but not enough to move the dial in either direction.  The company will host an earnings call tomorrow.  What they say on this call could spark the rally we’re looking for.  Continue holding.  Resistance is at $50.00 and $52.00.  Support is at $42.50 and $40.00.

 BSX May 15th 2015 $18 Calls

BSX reported earnings this week.  And it wasn’t what I was expecting.  First off, they trimmed revenue guidance for the year.  Then they said they’re paying out $119 million to settle 3,000 product liability lawsuits.  Needless to say, this has killed the bullish momentum behind this stock.  Sell this option to conserve capital.

 CDW June 19th 2015 $40 Calls

CDW is trending higher… although it has given back some of its gains over the last few days.  Nevertheless, it’s still in solid uptrend and our option carries beyond the May 7th earnings report.  Continue holding.   Resistance is at $40.00 and $42.50.  Support is at $36.00 and $34.00.

 WEN May 15th 2015 $11 Calls

WEN’s performance continues to disappoint.  The profit taking on this high flying stock has lasted much longer than expected.  But it’s holding above our support levels.  The good news is the option takes up through their May 6th earnings report.  I’m looking to this as the catalyst that can reignite the bullish momentum.  Continue holding.  Resistance is at $12.00 and $13.00.  Support is at $10.20 and $9.50.

Category: EOT Update

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