EOT Position Update – June 2, 2010
June 2, 2010
Market Snapshot
The markets are lost… or at least they’ve lost their direction.
Right now fear is keeping most investors on the sidelines. And shorter term traders are skimming quick profits.
The high volatility and low trading volume speaks volumes about investors’ mindset. It’s telling me there’s too much uncertainty to place big bets either way right now.
On a technical basis, there’s a tug-o-war going on.
On one side are the NASDAQ and the Russell 2000. On the other are the Dow and the S&P 500. And sandwiched in the middle are their respective 200-day moving averages.
The NASDAQ and Russell 2000 are both holding above their 200-day moving average. And the Dow and S&P 500 have been stuck below it for the last two weeks.
Something has got to give, so the question is…
Will technology and small cap stocks pull the rest of the market higher? Or will weakness in the large cap stocks drag everything else down?
It’s a tough call right now…
And on top of that, the recent spike in volatility has made buying options relatively expensive. When the VIX spikes, options become more expensive.
Once the VIX starts falling back, we can buy options without a huge volatility premium.
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.
WFC July 2010 $28 PUTS
WFC’s 200-day moving average is acting like a magnet. Anytime the price strays very far from it, it gets sucked right back in. If any more bad news bubbles up to the surface, we should see large cap financials like WFC take a hit. Hold tight for now. Resistance is at $29.75 and $30.50. Support is at $26.25 and $25.
ASIA October 2010 $30 CALLS
ASIA is carving out a new base around $21. If the markets uptrend is going to continue, tech companies like ASIA should lead the charge. Hold tight for now. Resistance is at $29.50 and $32. Support is at $18 and $16.
Category: EOT Update
