EOT Position Update – February 3, 2016

| February 3, 2016

Market Snapshot

The January selloff caused significant damage to charts of the S&P 500.

S&P 500

The large cap index has been making lower highs and lower lows over the last several months.

The poor performance was offset somewhat by better than expected 4th quarter earnings.

More than 70% of companies have beaten their EPS estimates.  This resulted in many stocks posting strong gains in response to these better than expected earnings.

Unfortunately, many of the moves were short-lived as guidance about future earnings was disappointing.

In short, this is a difficult market to trade with quick moves up and down with little follow through in either direction.  More often than not, we see such negative investor sentiment as an indication that markets have reached a short term bottom.

But the reality is the markets’ uncertain moves create an environment where the quick moves higher or lower will result in getting whipsawed out of trades.

Position Updates

Just a quick note:  Remember, we won’t update every open position every week.  We try to focus on the positions that have some significant news or price movement.

ADBE March 18th 2016 $92.50 Calls

ADBE is a perfect example of a whipsaw.  Over the course of four days during the last week, ADBE swung from $87.27 to a low of $82.70 then back to a high of $90.24.  These are not moves being triggered by changing fundamentals or even technical price action.  The current market action is being driven by fear.  And anything can happen to a stock’s price from one day to the next in a market that is simply a reflection of investors’ emotions.

Category: EOT Update

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