EOT position update June 18, 2014

| June 18, 2014

June 18, 2014

Market Snapshot

June has been an interesting month for the markets.

The month began with a sense of calm and quiet optimism.  Stocks were on the upswing.  The S&P 500 hit a new all-time high of 1,955 on June 9th.

Investor sentiment was becoming more bullish.  The AAII Investor Sentiment Survey showed bullish sentiment reaching its highest point of the year during the same week.

And at the same time, volatility was low.  The VIX fell to its lowest level since before the financial crisis.

But it didn’t last long…

The calm was broken when members of ISIS, a group linked to Al-Qaeda, began taking over Iraq.  The Islamist militants are advancing across the country uncontested and taking over control of one city after another.

Not surprisingly, the news triggered a minor pullback from the highs.  But overall, the market’s reaction has been remarkably subdued.

That brings us to today… Fed Day.

I’ve just finished reading the Fed statement and it looks like they are saying all the right things.  They are tapering the bond buying program by another $10 billion per month and interest rates aren’t expected to be hiked until 2015.

And more importantly, stocks are racing back toward their recent highs.

At this point, it appears the Fed and the good economic data here in the US is outweighing any uncertainty created by the situation in Iraq.  That’s good news for stocks.

Keep an eye on your email for a new trade coming out in the next couple of days.

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.

GLOG August 2014 $25 Calls
GLOG shares have jumped higher over the last few days. The stock is up 18.5% since I recommended buying call options on it a few weeks ago. And it cleared our first resistance level at $28.00. Our option hit a high of $4.00 per contract. That’s an eye-popping gain of 214%! Congratulations to everyone that cashed in on this trade. Aggressive traders can continue holding for the next leg higher. The next resistance is at $30.00. Support is at $25.50 and $20.00.

HIMX September 2014 $7 Calls
HIMX has been trading between $6.25 and $6.75 per share over the last few weeks. The bulls and bears have been drawn into a stalemate as both sides speculate about HIMX’s future. There’s clearly a lot of uncertainty about the company’s future. If they do in fact lose Google (GOOG) as a customer, it will clearly deal a major blow to their future earnings. But at this point, it’s all just rumor and speculation. If these rumors are proven to be unfounded, we could see HIMX rebound quickly. We still have plenty of time for this situation to be sorted out before our options expire in September. Continue holding… Support is at $5.75 and $5.00. Resistance is at $9.00 and $11.00.

Category: EOT Update

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