EOT position update May 21, 2014

May 21, 2014

Market Snapshot

It’s been a quiet week on Wall Street with little in the way of economic news and quarterly earnings season winding down.

The Q1 earnings season was a non-event.  Earnings for the companies in the S&P 500 are up around 1.3% and revenues are up around 0.9% over the last year.

As for living up to investor expectations, approximately 70% of companies beat the earnings per share estimates and 52% beat revenue estimates.  This is largely in line with what we’ve seen in previous quarters.

But keep in mind, earnings estimates fell dramatically during the quarter.  So, beating this lowered bar isn’t as bullish as it appears.

As a result, the S&P 500 has settled into a trading range between 1,860 and 1,900. And with the Memorial Day holiday next week, there’s unlikely to be much change.

Let’s move 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.

HIMX September 2014 $7 Calls
HIMX is our latest trade.  Those of you that have been around for awhile are sure to recognize this company.  The last time we bought call options on this stock they exploded for a 611% gain.  I like the fundamentals and it’s certainly oversold at this point.  A rebound from this level seems very likely given the history.  Support is at $5.75 and $5.00.  Resistance is at $9.00 and $11.00.

JOY June 2014 $60 Puts
JOY slumped to a low of $57.07 today.  The lowest level since we bought put options on it a month ago.  That’s good news for our put options that hit a new high of $3.75 today.  That’s a gain of 70% since we sent out the trade alert.  I don’t see a catalyst for a rebound in JOY before these options expire next month.  Aggressive traders should continue holding for bigger gains.  The next support is at $55.00.  Resistance is at $63.00 and $65.00.

Category: EOT Update