EOT Position Update – July 1, 2009

| July 1, 2009

July 1, 2009

Market Snapshot

The blue chip and technology stocks are battling for control of the market.

The NASDAQ continues to be the strongest index.  And the Dow is lagging behind. There is clearly a divergence (one moving higher and the other lower) within the overall market.

I went to charts to find an explanation.  Here’s what I found.

The Dow is the first index to reach its long term downtrend on the weekly charts.  As a general rule, the longer the time frame of a trend, the more powerful it is.  The longer term downtrend has superseded the intermediate term uptrend since the March lows.

Right now the market is at an inflection point.  The way I see it, the likelihood the market goes higher or lower from here is about equal.

If the NASDAQ can rally above the June high, it should pull the rest of the market higher too.  But if the Dow breaks support of the May low first, it will probably pull the entire market lower.

Until we get a clear break one way or the other, we’ll see more up one day down the next trading.

Now for 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.

  RGR August 2009 12.50 PUTS (RGRTV)
RGR appears to be locked in a range of $11 to $13.  But that should all change as soon as we get a look at the quarterly earnings later this month.  I’m expecting a big miss and all forward estimates to be revised lower too.  Hold tight for the earnings announcement.  Resistance is at $13 and again at $14.  Support is at $10 and $8.

  BRLI August 2009 $35 CALLS (BJQHG)
BRLI recently bounced off the 20-day moving average which is a good sign the uptrend is still intact.  It continues to consolidate in a bullish continuation pattern.  A close above $32 should send the stock running higher.  Resistance is at $36.80 and $40. Support is at $27 and $25.

  MRO October 2009 $35 CALLS (MROJG)
MRO couldn’t escape the energy sector sell off a few weeks ago.  But the good news is the stock has bounced back nicely.  We received a bit of good news when Goldman Sachs upgraded MRO yesterday.  We’ll see if the analyst upgrade can light a fire under the stock price.  Resistance is at $35 and $40.  Support is at $26 and $25.25.

  INTC October 2009 $16 CALLS (NQJQ)
These call options are now well into the money.  Intel reached our first resistance level today.  Congratulations to everyone locking in a 56% gain.  I think this option still has plenty of upside.  Aggressive traders should hold tight for another move higher. Resistance is at $16.80 and $19.  Support is at $14 and $12.75.

Category: EOT Update

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