EOT Position Update – January 20, 2016

| January 20, 2016

Market Snapshot

Are we already in a bear market?

Right now the S&P 500 is in the midst of its 2nd 10% correction in the last five months.  We don’t see multiple corrections of this magnitude in such a short period of time very often.  The last time it happened was 2008… right at the beginning of the last bear market.

And here’s another ugly data point for the S&P 500.

The 10-month moving average just crossed below the 20-month moving average.  The last it happened?  Yep, it was 2008.

S&P 500

What’s more, about half of the stocks that make up the S&P 500 are down 20% from their 52-week highs.  The materials and energy sectors are already down more than 20% and in bear market territory.

The financial and industrial sectors aren’t doing much better.  They’re both down more than 15% and could easily fall into bear market territory.

And to make matters worse, the Fed seems oblivious to it all.  They haven’t backed off their calls for four interest rate hikes in 2016.

Once again, the Fed finds themselves on the wrong side of the economic data.  Their forecasts that extrapolate what has happened in the recent past are wrong so often that it’s mindboggling why anyone pays any attention to them.

The increased risk has crippled investor psychology.

As I’ve talked about time and time again, investors are driven by emotions.  We often see their investment decisions driven by fear or greed.   More often than not, they’re either overly optimistic or way too pessimistic.

Now, onto the updates…

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.

INTC March 18th 2016 $33 Calls

INTC missed 4th quarter revenue and earnings estimates.  This was one of the few large cap stocks that had been holding up… so the market lost one its last legs to stand on.  The aftermath sent the stock past our support levels that indicate it’s time to sell this option.

Category: EOT Update

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