EOT Position Update – May 20, 2015

| May 20, 2015

Market Snapshot

The S&P 500 reach an all-time high of 2130 this week.  The large cap index is now up 4% so far this year.

The path here has been full ups and downs.  Many investors were positioned for the US economy to accelerate in Q1.  Along with it were expectations for a Fed rate hike.

Neither of them has happened…

The US economy continues its slow pace of growth. Wage growth and inflation are nonexistent.  And the Fed rate hike continues to get kicked further down the road.

Not surprisingly, the divergence of reality and expectations created volatility earlier this year.

Now investors and the Fed alike are coming to terms with the fact that things haven’t improved enough to warrant an interest rate hike.

In other words, we’re looking at more of the same scenario we’ve had over the last year.  That’s probably not enough to send the S&P soaring 30% higher like it did in 2013.  But it’s good enough for the S&P to repeat the 12% gains from 2014.

The S&P 500 is at new highs.  It appears that after a choppy five months to start the year, the market is finally ready to make a big move higher.

Right now the S&P is up 4%.  So, I’m expecting the S&P 500 to tack on another 8% over the next seven months.  That would push the S&P up to 2,300.

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.

GDDY August 21st 2015 $24 Puts

GDDY is one of the highest profile IPOs this year.  And like we typically see with these types of IPOs, it had an initial surge.  But the stock hasn’t been able to build on those initial gains.  I’m expecting to see the stock fall into the low $20 range as the speculators that are only in the stock to make a quick buck take their profits off the table.  Resistance is at $29.00 and $30.00.  Support is at $24.00 and $20.00.

 CDW June 19th 2015 $40 Calls

CDW priced a secondary offering at $36.80 this week.  The money raised in the offering will be used to repurchase shares from stockholders.  In other words, this transaction doesn’t dilute the stock but it did artificially depress the stock.  This should only be temporary and CDW should resume the uptrend going forward.  Continue holding.  Resistance is at $40.00 and $42.50.  Support is at $36.00 and $34.00.

Category: EOT Update

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