EOT Position Update – July 18, 2012

| July 18, 2012

July 18, 2012

Market Snapshot

Another crazy week in the markets.

Starting from last week, the market started heading downward only to come right back up again.

Now, I know what you’re thinking… and you’re right.

It seems the same every week.  Up and down with your fists pounding the table!

So, what’s happening on the fundamental side?

As of Monday, the S&P started to post some gains as larger companies such as Intel(INTC) and Coke (KO) posted positive earnings results.

Even more importantly, we didn’t see any impact on the markets caused by Europe.  I guess we’re just lucky that there hasn’t been any large events to move the markets so far this week.  But let’s not hold our breaths.

Lastly, we did see some flat economic reports this week so far with industrial production.  However, on a positive note, housing continues to surprise to the upside.

I think these are all weekly catalysts that are leading the market higher.  And as a result, we shouldn’t get too excited just yet.  At least for the short term.

Now, how about on the technical side?

On a week like this with no real news or economic surprises, we are left with momentum and technicals.

The volume hasn’t been anything special for a few days now, and we are still moving upward from a bounce off the 50-day moving average on the S&P 500.

We’ll continue to watch and see if this move ends above 1,375 on the S&P 500, setting a higher high from last week.

Bottom line…

I think we should indeed expect that higher high in the S&P.

However, global and domestic news seems to always put a wrench in these moves lately.

We’re going to be prepared to see small moves followed by large moves, as reactionary trading continues.

And we’ll be ready to take the necessary precautions in our trading to compensate for these moves.

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.

  SLB August 2012 $67.50 Calls
Schlumberger is our newest trade.  And wow… already an 84% gain on our call options!  As the market continues its swings back and forth, we can’t argue that SLB is holding up extremely well.  SLB is acting exactly like predicted.  It’s benefiting as oil slowly comes off of its multi-year lows.  And if oil continues its upside behavior, SLB will certainly follow suit.  And this will give us an opportunity for large gains.  For now, SLB is a hold.  Remember, we want SLB to move higher.  Resistance is at $70.00 and $72.50, while support is at $62.50 and again at $60.00.

  SCHW July 2012 $12 Calls
Schwab just started to break out of its trading range, closing the day at $13.00 per share.  With only three days until expiration, you have a decision to make.  Right now our call options are in the money and showing a nice gain of 40%.  So, if you like Schwab for the longer term, which I do, Friday you’ll have the option to buy shares of SCHW at $12 per share.  All you’ll need to do is call your broker and tell him you want to exercise your shares.  Otherwise, go ahead and sell to close your options any time between now and Friday before the close.  Congratulations to everyone who held this stock!

Category: EOT Update

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