EOT Position Update – May 27, 2015

| May 27, 2015

Market Snapshot

Over the last few weeks, there has been plenty of volatility in the financial markets.  But we hadn’t seen much of it in the stock market… it had been confined to currency and bond markets.

The first few trading days after the Memorial Day holiday are a different story.

Tuesday the S&P 500 had its worst day in weeks… dropping more than 1%.  Today, the S&P 500 is up nearly 1%.

Needless to say, it appears the volatility that had been confined to other areas of the financial market is spilling over into the stock market.

But here’s the thing…

The stock market volatility is in large part due to the US Dollar.

The S&P 500 had been relatively flat over the last six months while the US Dollar surged higher.  We saw stocks begin to gain some ground over the last few weeks as the US Dollar retreated from its highest levels in more than a decade.

This week the US Dollar is racing higher again.  And it’s putting pressure on the large cap stocks that get a significant portion of their revenue from overseas.

A strong dollar means those revenues earned in foreign currencies are worth less when they are translated back into US Dollars.

More importantly, the steep drop yesterday ended the bullish breakout above 2,120 on the S&P.  In other words, we’re right back where we we’ve been the last few months… A strong dollar and uncertainty about US large cap revenue growth.

Unless we get some big upside surprises in US economic data, we’ll likely see the S&P 500 struggle to build bullish momentum.

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 has moved back toward the high end of the trading range it has been in over the last few weeks.  But it’s showing no signs of bullish momentum.  We should see it reverse lower as more early investors take profits off the table near the recent highs.   Resistance is at $29.00 and $30.00.  Support is at $24.00 and $20.00.

 CDW June 19th 2015 $40 Calls

CDW has been slow to recover after the secondary offering at $36.80 last week.  It’s holding above support and should move higher from here.  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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