EOT Position Update – July 15, 2015

| July 15, 2015

Market Snapshot

Greece finally caved to the demands of their European creditors.  Their aid package of 86 billion Euros is in route to bailout the country and stave off an exit from the EuroZone.

Unfortunately, the end of the Greek drama (for now anyway) hasn’t put an end to market dynamics that have been dominating the financial markets.

For one thing, China’s bubbly stock market is still weighing on investors. And don’t forget, the S&P 500 is still entrenched in the same trading range that it has been for the last six months.

S&P 500

What’s more, we’re still seeing highly correlated moves among different asset classes.  These moves are often driven by news and they’re usually quick and violent.

All of the noise from Greece and China has flooded the markets with uncertainty. With our short-term strategy, it makes a lot of sense to take a wait and see attitude while these things play themselves out.  And that’s what we’ve done over the last few weeks.

And we’re not the only ones taking a wait and see approach… the AAII Investor Sentiment Survey shows 43% of investors are on the fence about the direction of the market.

What can get investors off the fence and the S&P 500 out of its trading range?

In a word… earnings.

Yep, the Q2 earnings season is shifting into high gear this week.  We’ll see the vast majority of companies report quarterly earnings over the next four weeks.  Some of the big tech and financial companies are getting things going this week.

We’ll also see economic data and testimony from Fed Chair Janet Yellen play a role in the markets this week.  But corporate earnings should be the thing that gets investors re-engaged in the market and the S&P 500 out of its trading range.

I have a few ideas to profit from these upcoming events.  Keep an eye out for a new trade (or maybe even two trades) later this week.

Let’s move 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.

LUV August 21st 2015 $36 Calls

LUV is moving higher after finding support around $32.50.  There’s been a lot of concern about growing capacity and the DOJ investigation into collusion.  I don’t think the DOJ can prove collusion.  Airlines across the board are still announcing plans to scale back capacity growth after the DOJ investigation came to light.  I think this stock is going higher from here.  Aggressive traders can continue holding.  Resistance is at $38.25 and $40.00.  The next support is at $30.00.

GDDY August 21st 2015 $24 Puts

The price action on GDDY has been bearish over the last month.  And I’m betting it is going to get even worse.  The company will report earnings on August 5th.  Aggressive traders should keep an eye on this date as the next big catalyst for our put option.

Category: EOT Update

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