EOT Position Update – March 25, 2015
Market Snapshot
We have seen some interesting peaks and valleys in the markets recently.
First off, there’s crude oil and the US Dollar. These two have been moving in opposite directions for months now.
Last week seems to have marked a peak in the US Dollar and a valley in the crude oil prices. The US Dollar made a new 52-week high and crude oil hit a new low of $42.41 before abruptly reversing course.
The US Dollar has endured a big drop while crude oil prices have rallied over the last week.
We also had market volatility, as measured by the VIX, collapse to the lowest levels of the year. This is a clear indication of bullish investor sentiment. Options traders are buying far more call options than they are put options right now.
We also saw small and mid-cap stocks climb to new all-time highs. We typically see these stocks outperforming large cap stocks when investors are bullish.
However, despite these bullish indicators, we’ve seen bullish investor sentiment tumble lower in recent weeks.
In fact, many of indicators of short term market momentum that I follow have been sending mixed signals lately. So, it’s no surprise to see a big selloff today and the spike in volatility that came with it.
My guess is all of the repositioning investors did over the last few months to profit from a strong US Dollar and falling oil prices started to unravel as these trades moved against them.
So, we’re seeing a flight to safety today. But it shouldn’t last long… we’ll likely see this capital redeployed in short order. And it should help build bullish momentum is some area of the market that we can profit from.
Let’s move onto the updates…
Position Updates
Just a quick note: Remember, we won’t update every open position every week. We try to focus on the positions that have some significant news or price movement.
CDW June 19th 2015 $40 Calls
CDW is our latest trade… today’s selloff hit stocks that had been showing bullish momentum lately the hardest. That triggered a 1.2% drop in stock price. But the correction is taking place within the upward trending price channel. CDW should continue moving higher in this price channel. Resistance is at $40.00 and $42.50. Support is at $36.00 and $34.00.
WEN May 15th 2015 $11 Calls
WEN is another high flying growth stock that found itself caught up in today’s selloff. One thing at play is the end of the quarter… there are likely some traders locking in profits before the quarter ends. Again, this should only be temporary and WEN should continue moving higher in the weeks ahead. Resistance is at $12.00 and $13.00. Support is at $10.20 and $9.50.
Category: EOT Update
