EOT Position Update – March 17, 2010
March 17, 2010
Market Snapshot
Happy St. Patty’s Day!
Stocks are up again today. The market’s advance is broad based with every market sector but healthcare participating in the rally.
Large cap stock indexes like the S&P 500 and NASDAQ have followed the small and mid-cap indices to new 52-week highs. It’s the strongest advance the markets have made in months. And at this point, the rally’s showing no signs of letting up.
The big news this week is out of (surprise, surprise) Washington DC.
Healthcare and jobs continue to be the hot button topics. But I’ve got to question politicians’ motives. Are they doing what is in the people’s best interest or their own? (Most likely their own.)
A tax incentive for companies to hire unemployed workers was signed into law today. It’s expected to provide 250,000 jobs over the next year. It’s a drop in the bucket when compared to the 8.4 million jobs lost during the recession. But it’s a step in the right direction nonetheless.
It’s also looking like Obama is going to have the needed votes to pass healthcare reform. The biggest losers if this bill passes will be the insurers. But more importantly, the uncertainty is keeping healthcare stocks mired in the muck.
And last but not least, the Federal Reserve voted to keep short term interest rates near zero. And repeated the statement, economic conditions “warrant exceptionally low levels of the federal funds rate for an extended period.”
All in all, the markets are reflecting the improving economic conditions and very aggressive pro-growth actions the Fed and Washington are taking. I’m expecting the S&P 500 to continue on up to around 1190 to 1200 before it runs into any resistance.
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.
WFR July 2010 $13 CALLS
WFR is off to a great start. The stock is up over 8% and our option over 50%!WFR popped up a little today when an analyst initiated coverage of the stock with a $15 price target. Hold tight for bigger gains ahead. Resistance is at $15 and $17. Support is at $11.50 and $11.
VZ July 2010 $30 CALLS
VZ is breaking out over the 50-day moving average after a weeklong consolidation pattern. Our option hit a peak gain of 84% today! VZ should quickly run to the 200-day moving average at around $30.50. But ultimately, I see VZ in the mid $30s. Hold tight for bigger gains ahead. Resistance is at $31.25 and $33. Support is at $28 and $27.
INTC July 2010 $20 CALLS
INTC’s breakout came on news they’re introducing a new chip for use in servers. The move sent INTC blazing through our first resistance level. Conservative traders should go ahead and lock in gains of up to 100%! Congratulations on a successful trade. Aggressive traders should hold tight. The next resistance is at $25. Support is at $18.50 and $18.
SWKS May 2010 $15 CALLS
SWKS is attempting to breakout to new highs today. The price action since SWKS last broke out to a new high on March 1st is bullish. The stock never closed below the support of the last breakout at $15.33. It looks like SWKS is finally setting up to make a run at our resistance levels at $16.50 and $18. Support is at $12.25 and $11.50.
CSCO April 2010 $24 CALLS
CSCO is now in a solid uptrend. The mild pullback after the breakout and the continued advance is a very bullish sign. Aggressive traders should hold tight for bigger gains ahead. The next resistance is at $29. Support is at $22.50 and $20.
SBUX April 2010 $22 CALLS
SBUX is rewarding aggressive traders who stuck with it. The stock got an analyst upgrade yesterday. The analyst basically said the same thing I did months ago. Our option hit a new peak gain of 135%! The next resistance is at $26. Support is at $18.50 and $17.
***Editors Note***
We recently updated our operating manual to address this change. You can find it on the website under “Special Reports”.
Option Symbology changed on February 12, 2010. That means a new method for identifying options is now in place.
What does this mean for you? The old five character option ticker is a thing of the past. It’s being replaced by a new option ticker format.
Here’s what it breaks down to.
The new option ticker will be expressed as: Root + Expiration + Strike + Type.
Root = the ticker symbol of the underlying stock.
Expiration = the expiration date of the option.
Strike = the strike price of the option.
Type = call or put.
The good news is we already give you all of the information for the new ticker in the trade alert. The bad news is the new ticker is going to be longer. And to top it off, individual brokerage firms may generate their own tickers for use only on their platform. So make sure to check with your broker.
Category: EOT Update
