EOT Position Update January 15, 2014
January 15, 2014
Market Snapshot
After a sluggish start to the year, the S&P 500 looks to be getting back on track this week.
The large cap index hit a high of 1,849 on December 31st. It dropped 1.8% to a low of 1,815 on Friday, January 13th before rebounding and hitting a new high of 1,850 today.
This is primarily due to the mixed bag of economic data we’ve received lately.
Most notably, the nonfarm payroll data missed the mark by a wide margin on Friday when the S&P hit the recent low of 1,815. The US economy was expected to add 193,000 jobs in December. But the US added just 74,000 jobs last month.
The weak jobs number was offset by stronger than expected retail sales and manufacturing data this week. And the S&P has bounced back. Clearly the economic data is sending mixed messages about the economy.
Now investors are turning their attention to earnings season…
The good news is expectations aren’t that high. Analyst earnings estimates have been trending lower over the last few months. So the bar has been set pretty low for companies to deliver better than expected earnings.
One thing is for sure… investors love to see companies beat estimates.
A strong earnings season that includes revenue growth should spur the S&P to new highs.
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.
CMLS March 2014 $7.50 Calls
CMLS is down about 3.5% to $7.71. It has pulled back to the 20-day moving average. This level has acted as support on previous pullbacks. CMLS will report earnings in a few weeks. The stock has responded well to the last two earnings reports. Continue holding… Resistance is at $9.00 and $10.00. Support is at $7.00 and $6.87.
SPR April 2014 $35 Calls
SPR is up 4% to $34.90 after a brief period consolidation. This stock is undervalued based on their current 2014 projections. Continue holding… Resistance is at $38.00 and $40.00. Support is at $31.00 and $30.00.
CRM February 2014 $52.50 Calls
CRM has been on fire lately. Since we recommended buying call options in it, the stock is up 15.5% to $59.28. Our option is up a whopping 170% to $6.65 today! Congratulations to everyone who cashed in on this huge winner.
C March 2014 $57.50 Calls
C is up 3.5% since our trade alert to $54.94. It’s now firmly above the sticking point around $53.50 that held C in check over the last six months. C will report earnings tomorrow before the markets open so make sure to keep an eye on this one tomorrow. If Bank of America’s (BAC) results are any indication of how C will perform, we should be sitting pretty tomorrow. Resistance levels are at $60.00 and $65.00. Support is at $49.00 and $48.50.
GE February 2014 $28 Calls
GE’s performance has been a bit disappointing. The stock has been on a bit of a roller coaster ride lately. The stock was trading for $27.06 when our trade alert went out. On December 31st, it hit a high of $28.09 but it has fallen back to $27.29 as I write. GE will report earnings on Friday. Earnings are expected to jump 20% year-over-year to 53 cents per share. This is a ‘do or die’ moment for this trade. Resistance is at $28.00 and $29.00. Support is at $49.00 and $48.50.
January Options Expiration
The last day to trade January options is this Friday. Anyone still holding the RAD January 2014 $4.50 Calls, YGE January 2014 $8.00 Calls, and DTV January 2014 $65.00 Calls should look to close these positions in the next few days. RAD and DTV are both in the money. In fact, our options on DTV hit a new high of $7.44 today. That’s an eye popping 303% gain!
Category: EOT Update
