EOT Position Update – February 1, 2012

February 1, 2012

Market Snapshot

This rally is just getting started…

It’s amazing how this market has refused to correct.  Sure, we’ve seen a down day or two, but for the most part… the stock averages just keep climbing in 2012.  In fact, the S&P 500 finished the month up by over 2.5%.

What’s more, the NASDAQ managed to close January 6% higher.

There’s no doubt, we continue seeing bullish indicators in the marketplace.  Bespoke Investment Group’s market timing model remains bullish.  In their model, they’re looking at sentiment, technical, and fundamental indicators.

Many of these are forecasting the market will be trading higher in coming weeks.

While it’s a good sign to see a group of indicators flashing green, seeing the real global growth is even better.  Russia just reported their economy expanded 4.3% last year.  And that’s faster than the 4.1% forecast.

Even with these bullish signals, there is still one wildcard lurking in the background… the EuroZone debt crisis.  Unresolved Greek debt negotiations remain a major concern, even as the US economy appears to be growing.

And that’s keeping gains in the market reigned in…

Just think, if the EuroZone can keep from blowing up, we’ll see this rally hit high gear in no time.  And remember, the Fed offered yet another year of near 0% interest rates to the markets… extending it out until 2014.

With stimulus like that in place, the market would have no choice but to continue this rally.

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.

  BHI April 2012 $47 Puts
After our put options turned in a 41% peak profit last week, BHI has since traded higher.  With the stock still trading below $50, we have plenty of time for aggressive traders to see BHI puts increase in value.  Even better, the stock has yet to break above the critical $52.50 level… and has just put in a lower high.  Aggressive traders should continue holding.  Resistance is at $52.50 and $55.00.  Support remains at $45.00.

  TGT April 2012 $50 Calls
TGT traded in a range this week.  But more importantly, the stock continues to trade above the $50.00 level.  Right now, TGT is bouncing up and down across the 200-day moving average.  Should the stock continue trading above this average, we could see the rally pick up steam.  Continue holding… Resistance is at $55.00 and 60.00.  Support is at $42.50 and $40.00.

  GLD March 2012 $166 Calls
Gold prices are really taking off.  But what else would you expect on the heels of the Fed’s recent interest rate decision?  Our options on the gold ETF are now up more than 120%!  I’m expecting much bigger gains to come.  I think we could have a big winner on our hands no matter what the rest of the market does.  Remember, gold plays a role of both inflation hedge and safe haven asset.  Continue holding for more gains.  We’re nearing resistance at $170.00, and again at $176.00.  Support will be at $148.00 and $140.00.

  CAT February 2012 $95 Calls
CAT may have just peaked in the near term.  While the heavy equipment maker beat earnings estimates, the stock is seeing some profit taking.  After reaching a massive 379% gain, time is running out on further gains.  Remember, expiration is later this month.  I suggest selling any remaining puts you’re holding and lock in fantastic gains.

Category: EOT Update