EOT Position Update – August 8, 2012
August 8, 2012
Market Snapshot
If you’ve turned on any news station this week, you’ve either heard or seen that the S&P 500 is on fire.
As a matter of fact, all of the overall markets are moving higher this week on the back of Friday’s big push upward.
What’s more, we haven’t seen any news events act as a driver for these markets. They look to be following a nice upward move after the pull back of a few weeks ago.
Now the question is, will traders continue buying when the S&P 500 is pretty much at yearly highs?
It’s hard to believe they will.
But this year has been anything but predictable.
So, what’s happening on the fundamental side?
The big news of the past week is the earnings announcement yesterday out of Priceline (PCLN).
PCLN came out after the close yesterday and missed their numbers.
As a result, the market is pounding them down today as they are down over 14% or $100 a share.
There is a good chance that this will have an effect on the Nasdaq today and we’ll see if it carries through to the other markets as well.
Now, how about on the technical side?
This market is certainly surprising traders.
The S&P closed above the key level of 1,400 yesterday, an area of resistance in May, so we will see what it does here.
Although we haven’t seen much in regards to news and economic events this week, the markets appear to be focused on direction only.
Good or bad news has been pretty much washed out with this current upward move.
And since we don’t have much to look at this week economically and no events scheduled, we will see what comes this week and follow what the S&P does here at 1,400.
Bottom line…
We are defiantly awaiting a catalyst with the markets here.
We can go either direction from this point in the S&P 500. It just depends on how new news that will come out over the next few days and into next week will be digested.
The markets have certainly priced in some optimism here, the majority of which is coming on the heels of this huge rally.
Technically we look to be a little overbought and could see a slight pullback over the next week or so.
We, like everyone else, will wait and watch.
Patience is key here, we don’t want to be sucked in and then have a pullback hit us hard.
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.
LAZ September 2012 $25 Calls
LAZ has become another big winner. As the banking sector was been pulled up by this market, so has Lazard. It has now clearly moved above our first resistance level of $27 a share. Congratulations to conservative investors that enjoyed a 198% gain in only a few short weeks. With the market not pulling back right now and plenty of time until September expiration, aggressive investors continue holding LAZ for even larger gains. Remember, we want LAZ to move higher. Resistance is now at $29.00, while support is at $22.50 and again at $21.50.
UTX August 2012 $77.50 Calls
UTX has not exactly acted as expected. Even though the industry itself has been doing well, UTX has lagged behind over the last month. What’s worse is that the stock has been unable to rally with the rest of the market. Now with a pullback possibly on the horizon, I fear that the remaining premium in these options may start to deteriorate quickly as August expiration approaches. As such, I’m recommending that you sell your UTX call options and preserve capital for the next trade. We’ve been hot lately and there is no reason to hold these calls any longer.
Category: EOT Update
