EOT Position Update – December 9, 2009

December 9, 2009

Market Snapshot

I’ve talked at length about the weak dollar versus strong stock and commodity dynamic.  Recently the US Dollar’s been rallying.

Some think we could be seeing this trend come to an end.

However, it’s more likely something else is at play.

You see, there was a flight to safety…

The flight to safety started with Dubai’s debt problems.  And, it was amplified by the credit rating companies like Moody’s and Fitch.  They recently cut ratings on a number of the world governments’ debt.  They noted an increase in the risk of default.

Some investors fearing the worst sold foreign stocks, commodities, and currencies to buy US Dollars.  That in turn pushes the US Dollar higher.

Bigger picture, the economic environment hasn’t materially changed.  I’m expecting the weak dollar and strong commodity to regain control of the markets soon.  But we’ll need to see the charts confirm it before drawing any conclusions.

Now for 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.

  NVDA Mar 2010 $15 CALLS (UVACC)
NVDA is a new trade we sent out this morning.  Check your email or the website for more details.  A midmorning rally pushed the option beyond our buy up to price quickly. Some of you might not have had the chance to purchase this option.  Don’t give into the urge to chase this trade beyond the buy up to price.  Keep an eye on it.  If the option dips below $1.80 in the next few days, feel free to buy… otherwise, wait for the next trade.  Resistance is at $18 and $20.  Support is at $13 and $12.

  SBUX Apr 2010 $22 CALLS (SSUDV)
SBUX is consolidating in a tight range on below average volume.  Look for a breakout above the previous high to trigger the next leg higher.  Management’s working hard on their international growth plans.  As details emerge over the next few months, the stock and our option should gain momentum.  Hold tight for now.  Resistance is at $23.50 and $26.  Support is at $18.50 and $17.

  VIT Feb 2010 $17.50 CALLS (VITBW)
A Chinese stock analyst maintained its positive rating and price target of $21 on VIT today.  VIT has held up well as other Chinese stocks have declined over the last week. As investors appetite for risk returns, VIT shares should rally.  Resistance is at $21 and $22.50.  Support is at $14.50 and $12.65.

  MOT Apr 2010 $10 CALLS (MOTDB)
We got a bit of good news this week when an analyst initiated coverage on MOT with an outperform rating.  And, the analyst added a price target of $11.  This falls right in line with my thinking… breaking the company up will unlock shareholder value, sending our call options higher.  Hold tight for now.  Resistance is at $10 and $12.  Support is at $7.75 and $7.

  MCRS Mar 2010 $30 CALLS (MFKCF)
MCRS continues racking up new customers thanks to their top-of-the-line hospitality management software.  Their first mover advantage on wireless check-in capability continues to be a strong selling point.  The recent 20- and 50-day moving average crossover indicates the shares are gaining momentum.  Hold tight for now.  Resistance is at $30.50 and $33.  Support is at $25 and $22.50.

  MMM Jan 2010 $75 CALLS (MMMAO)
3M’s attempting to break through the $79 level that’s held since October.  A close above $79 should set the stage for a push to our next resistance level.  Our options are up better than 80%!  Aggressive traders still holding this option should hold tight for the next move higher.  The next resistance is at $80.  Support is at $65 and $60.

Category: EOT Update