EOT Position Update – March 7, 2012

| March 7, 2012

March 7, 2012

Market Snapshot

This Rally Will Bend, But Not Break!

Even after yesterday’s 200 point loss on the Dow, the rally continues.

Since the start of 2012, the Dow is up by 5% and the S&P 500 is up over 7%.  Some analysts doubt the rally can continue and point to yesterday’s selloff as the start of a correction.

But I see things differently…

Looking back, the number of down days in the major averages is few and far between.  Most days we’ve seen the early AM selloff bought up by the end of the day.  Sometimes the averages only come back up to even… or slightly down.  But other days, the selloff is being bought all the way back up and keeps the rally intact.

That’s important to note.  Price action is critical to keep the momentum rolling…

Looking at the big picture, I’m not worried with yesterday’s triple digit loss.  We’ve been due for some profit taking.  In fact, I’m sure many investors will see this pullback as an opportunity to finally get off the sidelines.

In addition to technical strength, we’re seeing fundamental data continue improving in the US.  And today’s ADP jobs report solidifies we’re still moving in the right direction…

The forecast was for 208,000 jobs to be added, but the report beat expectations.  A total of 216,000 private sector jobs were added to the already improving labor market.  The strong ADP number tends to increase the odds of a strong Non-Farm Payroll reading on Friday.  If we see a strong jobs number Friday, this rally might just shift into overdrive.

But it’s not just the jobs data that’s improving.

Last week, US Core Personal Consumption was also up, showing a 1.3% improvement. That helped support US Real GDP for Q4 reach 3.0%, a psychologically important number.

The list goes on and on…

As you can see, there are a number of economic indicators flashing positive signals. While every single economic data point isn’t improving, they’re not trending lower.  And that bodes well for this rally!

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.

  MRO July 2012 $36 Calls
Marathon shares fell this past week.  And yesterday, shares traded as low as $32. Most of the price drop can be tied to the recent deterioration in oil prices, falling from $110 to $104.  There’s a bunch of time left in this trade and I fully expect MRO to rally into the summer driving season.  Remember, we want this stock to move higher. Resistance is at $42 and again at $50.  Support will be at $30 and $27.50.

  GRPN April 2012 $21 Puts
Groupon shares have resumed their slide this week.  As shares consolidated last week, they were due for a breakout or a collapse.  The good news for us… we’re seeing shares collapse.  Better still, our GRPN puts reached a gain of 51% today.  We broke our initial support level of $18, so conservative investors may want to cash in for a solid gain here.  Remember, we want this stock to move lower.  Support remains at $15.  Resistance levels will be at $23 and again at $26.

  TGT April 2012 $50 Calls
Target just won’t stop climbing.  And again, our calls reached a high of $6.97 Monday, for a gain of 359%!  TGT shares look to keep climbing, so aggressive traders should keep holding for bigger gains!  Again, we want this stock to move higher.  Resistance remains at $60.  Support is at $42.50 and $40.

Category: EOT Update

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