EOT Position Update – June 20, 2012
June 20, 2012
Market Snapshot
Yesterday showed another bullish day as the market continued to push higher.
If you haven’t seen, this push upward really started last Thursday.
And each little move upward has been accompanied by a small amount of news out of Europe.
It first started with optimism of elected officials in Greece. And finished this past weekend with the pro-bailout party winning the Greek election.
Next was better than expected Spanish bond sales. Since better Spanish bonds sales have been directly correlated with the US equity market, this has certainly helped to push the US markets above key technical levels.
Technicians were keeping their eye on the 1,330 level on the S&P 500, and the market held strongly above that level through the end of last week.
A very good sign for investors!
However, let’s get the other half of the story…
We have seen these violent rallies before. And now more than ever, we want to make sure not to get caught with our pants down.
The FOMC announcement is scheduled for later today, and no change is expected. But, our focus will be on what is said after the announcement. Specifically in regards to what the Fed is focusing on moving forward through the end of 2012.
So, where are we?
Technically we are back into sideways markets.
Yet, the good news is that it seems we’ve decreased the chances of another market breakdown to new lows.
At this point, we need to identify new patterns at these current market levels and be aware of portfolio exposure if we continue a move sideways.
We’re not going to be looking to jump in aggressively here, although we will be looking to add some bullish positions over the next few weeks that will be beneficial in this type of market.
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.
CSCO August 2012 $16 Calls
Cisco Systems has held up very well in this choppy market. Our call options are up about 17% since our recommendation. If the market continues its upside behavior, CSCO will certainly follow suit. And this will give us an opportunity for larger gains. For now, CSCO is a hold. Remember, we want CSCO to move higher. Resistance is at $18 and $20, while support is at $15.50 and again at $14.75.
SCHW July 2012 $12 Calls
Schwab was a little rocky last week… but is now back on track on an upward trend. As the JP Morgan (JPM) story comes to a close, the banking story from last week remains intact. SCHW has held up well in this uncertain environment. Remember, if the banking sector jumps, SCHW will reap the rewards. And since our options are still in the money and up approximately 33%, we’re going to hold these options for large gains. Remember, we want this stock to rise in value. Resistance is at $13.20 and $13.60, while support is at $11.70 and again at $11.20.
Category: EOT Update
