EOT Position Update – February 25, 2009
February 25, 2009
Market Snapshot
Two days ago we had a huge rally. All on the word from Fed Chairman Ben Bernanke that the recession might end at the end of the year. Then, today we’re all over the place trying to decide if we should follow through on the prior market action. This tells me one thing… the market needs time to develop a trend, and were still trying to figure out where the trend should go.
The big news this week…
The big market moving news wasn’t news at all. It was rumor of the US government looking to nationalize the major banks. The White House and Fed did everything they could to push aside those rumors… it didn’t really help.
More M&A news in the healthcare space… Biogen Idec is supposedly in talks to buy Acorda Therapeutics. As we mentioned in the WPI trade alert we sent out earlier this week, these rumors are good for our position.
JP Morgan decided to slash its dividend by more than 80%… just in case. Now American Express is offering to pay certain cardholders cold hard cash to close their accounts. They no doubt paid big money to acquire those very cardholders.
George Soros – one of the greatest traders of our time – announced he was increasing his stake in both Potash and Petroleo Brasileiro.
Now for the trade 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.
WPI May 2009 $30 CALLS (WPIEF)
This was a new trade this week. We did so well on the last one, why not stick with what works. Resistance levels will be at $31.50 and again at $33. Support levels are $27 and $25.
TM April 2009 $55 PUTS (TMPK)
Toyota has dropped lower in 6 of the last 10 trading sessions. At one point the stock was trading hands at just under $62. This was below the first support level. The trade had a small profit at that point. Congratulations to everyone who took the win. We’re continuing to move in the right direction. Aggressive traders should give this trade a bit more time. Resistance levels are $72.50 and $75. Support levels are $62.50 and $60.
ORCL June 2009 $19 CALLS (ORQFT)
ORCL, unfortunately, dropped like a rock this week. We passed the first support level and traded close to the second support level. I’m still expecting technology stocks to lead the market higher over the next few weeks. If you’re aggressive, let’s see if this one recovers a bit. Resistance levels are $18.50 and $20.50. Support levels are $16.50 and $15.50.
EMC April 2009 $11 CALLS (EMCDM)
EMC trended lower this week. Not good for the options. We’re barely in the money. Resistance levels will be at $13.00 and again at $14.25. Support levels will be at $9.50 and $8.50.
Parting Shots…
Obama’s Pep Talk
Last night I listened to Obama give the country a pep talk. Clearly, he’s one of the best speakers in Congress. His points resonated, and his love for the country is clear.
I liked his plans on alternative energy and improving our country’s infrastructure. What I didn’t like was his talk of tax increases (I guess I still believe a flat tax is the most fair way).
We’ll see what kind of power he can wield once his budget gets submitted. His talk of going line by line through the budget to eliminate waste sounds great… my question is who’s deciding what works and what doesn’t. Who’s separating the trash from the treasure. As they say, one man’s trash…
I’ve got to say, no matter your political affiliation, he’s quite the speaker.
Category: EOT Update
