EOT Position Update – January 27, 2016

| January 27, 2016

Market Snapshot

Volatility in oil prices and energy stocks are driving this market.

The US stock market has become highly correlated to oil and Chinese stocks.  In other words, if oil and China are up, then US stocks follow suit.  But if China and oil are down, US stocks follow them lower.

This is unusual.  Oil and stocks don’t typically trade in lock step fashion like they have recently.  In fact, lower oil prices are usually a good thing for the stock market.

This has left investors fearful that there could be more downside for US stocks.

Last week’s jobless claims are adding fuel to the fire.  The number of people applying for unemployment benefits jumped to its highest level in seven months.

The good news is jobless claims are still below 300,000… that indicates the job market is still healthy.  What’s more, several other data points about consumer confidence and new homes sales show that the market volatility isn’t bothering consumers.

It feels like we’re reaching a capitulation point… a point where even bad news isn’t sending stocks lower like it had during the first few weeks of the year.

There is a lot of capital parked on the sidelines.  And many market players are chomping at the bit to get back into this market.

This could lead to a sharp spike higher for US stocks in the weeks ahead.

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.

ADBE March 18th 2016 $82.50 Calls

ADBE is hovering near support and in an upward trending price channel.  I think ADBE’s change to a subscription based model isn’t fully appreciated in the current stock price.  If the market can snap out of its current funk, we should see shares of ADBE and our call option rocket higher.

Category: EOT Update

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