EOT Position Update January 29, 2014
January 29, 2014
Market Snapshot
It’s been the ugliest week for stocks in months.
The S&P 500 is down nearly 4% over the last week. As far as pullbacks go, it’s mild. Short term corrections of 5% to 10% are healthy in a bull market.
So why does this pullback seem to sting a little more than normal?
Simple…
Stocks are coming off a 30% gain last year. And everyone was bullish on stocks in 2014. Then Mr. Market smacks everyone right in the mouth with a 4% correction.
In the blink of an eye, market psychology changed from greed to fear.
Here’s the thing…
It’s not really that bad. According to JPMorgan, 122 S&P 500 firms which have posted Q4 figures, 73% beat on EPS and 67% beat on revenues. But investors largely ignored these solid earnings reports.
Instead they focused on the many little items combining to cause weakness in the markets.
For instance, Argentine Peso devaluation, Turkish banking problems, Kiev rioting toward revolution, slowing Chinese economic data, a new debt ceiling fight, a DOJ attack on the U.S. Banking sector, new bombings in Egypt, drought in California, and frigid weather in the Midwest/East are a few of the items that came together to cause the selloff.
All things considered, being stuck on the wrong side of a correction hurts. But by not trying to call a top over the last year, we’ve been able to avoid getting whipsawed out of trades and rack up huge winners.
This quote from Derek Hernquist says it all, “Luckily, markets give us a chance to go to our corner, regroup, and get ready for the next opportunity.”
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.
EIGI May 2014 $15 Calls
EIGI has been swept up in the markets’ selloff. It dropped through our $12 support. That’s the cue for conservative traders to cut their losses. More aggressive trader should let this one ride. EIGI should come racing back as the markets stabilize. Resistance is at $20.00 and $22.00.
SPR April 2014 $35 Calls
SPR’s gains were quickly wiped away as the stock market sold off this week. But it’s holding up well over the last few days. We still have plenty of time for this one to work out in our favor. Continue holding… Resistance is at $38.00 and $40.00. Support is at $31.00 and $30.00.
Category: EOT Update
