EOT Position Update – June 23, 2010

| June 23, 2010

June 23, 2010

Market Snapshot

Over the weekend, China got the markets fired up.  It looks like the Chinese will let their currency, the Yuan, appreciate against the U.S. Dollar.

The reality is the Chinese are going to manage their currency’s valuation very closely. We’re not going to see the Yuan explode in value over a short period of time.

But over the long run, the Yuan should appreciate.  The move will help the U.S. and Chinese economies continue on the path to recovery.

The news sent the markets up big to start the week.  But the strong start faded quickly as investors realized the Yuan wasn’t going to be re-valued overnight.

It’s looking like the markets could be stuck in range bound trading for awhile.  At least until we get more information on the health of the economic recovery.

Outside of companies delivering better than expected earnings or revisions to earnings guidance, the markets have been relatively calm.

With that in mind, we’re gearing up to take advantage of some of the winners and losers of the upcoming earnings season.  It’s always an exciting time… and one we can profit from.

As always, you can email me your questions and comments at customerservice@hyperionfinancial.com.

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.

  JNJ October 2010 $62.50 Calls
JNJ CEO Bill Weldon is wanted by Congress.  They want JNJ’s top exec to answer questions about the recent recall of some of JNJ’s children’s medicines.  The bad press has sent JNJ shares down a little.  It should give everyone an opportunity to grab these calls at a great price.  Once the news fades, we should see shares of JNJ rally. Resistance is at $62.50 and $65.  Support is at $57.50 and $55.

  RIG August 2010 $40 Puts
RIG got a bigger bounce than I expected, but there’s still an enormous downside for the offshore drilling company.  We’re already seeing RIG head lower.  Even news of a federal judge lifting the offshore drilling moratorium wasn’t enough to spark a sustained rally in the embattled driller’s stock.  Hold tight for now.  Resistance is at $56.75 and $64.  Support is at $40 and $35.

  ENS September 2010 $22.50 Puts
ENS rallied up to the resistance line of the downtrend.  Since then, ENS has fallen 8% over the last few days.  Clearly the ENS’s downtrend is intact.  It should continue heading lower along the trend line.  Hold tight for now.  Resistance is at $25.50 and $27.  Support is at $20 and $19.

  WFC July 2010 $28 Puts
WFC is heading down to retest the recent lows.  The negative news for financials continues to mount.  Everything from financial reform to horrible home sales indicates WFC will continue falling in the short term.  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’s rally was temporarily derailed at resistance of the 200-day moving average around $25.  But the fundamental and technical picture for ASIA remains strong.  And I’m not the only one who thinks so… An analyst from UBS initiated coverage of ASIA with a buy rating and a $30 price target.  These are all positive signs ASIA will make a push toward our resistance levels shortly.  Hold tight for now.  Resistance is at $29.50 and $32.  Support is at $18 and $16.

Category: EOT Update

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