EOT Position Update – February 22, 2012
February 22, 2012
Market Snapshot
Bullish Signals Don’t Stop… & Greece
Watching economic data right now is like being at Mardi Gras this week. Instead of watching a non-stop parade of costumes and floats, we’re seeing bullish economic data. And I like it!
First off, the housing market looks like it may be bottoming. Existing home sales jumped 4.3% in January and inventories fell close to seven-year lows. This is mostly due to lower prices, unseasonably warm weather, and a growing economy.
Even better, last week’s Housing Starts report for January beat expectations, coming in at 699,000 for the month. It’s great to see a boost in one of the worst segments of the US economy.
But that’s not all…
In addition to the housing market, positive reports are in from both the Philly and Chicago Fed regarding manufacturing activity. Even better, both CPI and PPI numbers (excluding Food and Energy) were both higher last month.
Finally, retail sales (excluding auto and gas) exceeded the forecast in January. Like I said, it’s a non-stop parade of strong data. And it will keep the market moving higher from here.
Now, the really big news the market’s been waiting for has arrive… Greece will receive another bailout, preventing default of the nation’s debt. Hooray, the market is saved.
The deal finally came about as private creditors will write down over 53% of their sovereign debt holdings. This will enable Greece to reach debt to GDP ratio goals by 2020. While nothing is completely finalized, there is a concrete agreement in place to move forward.
The bottom line…
The fear that’s been keeping many investors out of the market is on the verge of being put to rest. And that clears the way for the markets to move to new highs.
On to 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.
GRPN April 2012 $21 Puts
Groupon rallied a bit off its lows, but appears to be moving to the downside once again. As a result, our puts are trading back up near $3.00. Remember, we want this stock to move lower. Support levels will be at $18 and $15. Resistance levels will be at $23 and again at $26.
BHI April 2012 $47 Puts
BHI appears to be headed higher at the moment. Shares have climbed from $47.50 to nearly $53. In addition, BHI did breach our initial resistance today. Aggressive traders should pay close attention to this trade. With over two months left until expiration, we still have some time to capture larger gains. Resistance is at $55 and support remains at $45.
TGT April 2012 $50 Calls
Target continues making higher highs in this rally. And in the process, our calls are now up a whopping 147% today! The best part, TGT is nowhere near our initial resistance of $55, so keep holding for even bigger gains. Once again, we want this stock to move higher. Support remains at $55 and $60. Resistance is at $42.50 and $40.
Category: EOT Update
