EOT Position Update – November 10, 2010

| November 10, 2010

November 10, 2010

Special Note On Our Recent Outstanding Performance 

This has been a phenomenal run.  Three out of our last six trades are up 106%, 117%, and 327%.  And our last trade is up 40% in just three days.

Clearly, we’re on one hell of a roll.  But temper your expectations… We’re not going to quadruple your money on every trade.

When the markets get on a roll like this, we’re going to ride it for all it’s worth!

Market Snapshot

Last week we were waiting on the Fed to announce plans for QE2.

Well, the results are in…

The Fed plan calls for $600 billion in new asset purchases.  This number is right in the ball park of what investors were expecting.

As a result, the market reaction has been restrained.

It’s interesting how quickly the perception of the Fed action is changing.  In the lead up to the announcement, it was all good.  Investors were praising the action.

Now that the Fed has taken action, people are talking about QE2 “destabilizing the world economy”.  Talk about perception turning on a dime…

We’re also seeing a bit of a countertrend rally in the US Dollar.  The dollar’s actually strengthening after getting hammered for the last five months.

What’s concerning about the dollar’s strength is stocks have been moving in the opposite direction.  So a strong rally in the US Dollar could undermine the market’s upside potential.

But outside of the risk of a rally in the dollar, the markets appear poised to continue their recent rally.

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.

  DRQ March 2011 $85 Calls
DRQ is our most recent trade.  Since we rolled it out last Friday, it has continued to press higher.  Our option hit a peak gain of 40% today… It’s a great start.  But I’m expecting bigger things ahead.  I think oil is destined to reach $100 per barrel in short order.  Hold tight for further gains ahead.  Resistance is at $80 and $90.  Support is at $62 and $57.

  MCP March 2011 $45 Calls
MCP is looking good.  It’s in a strong uptrend.  The upward sloping 20-day moving average is providing support on any pullback.  China’s Rare Earth Element export quotas have government officials sitting up and taking notice.  Getting alternative producers outside of China could become a hot item on the global policy agenda.  This could accelerate MCP’s plans to get their new mines up and running.  Clearly this would be great news.  Hold tight for the next leg higher.  The next resistance is at $45. Support is at $25 and $20.

  FRX January 2011 $34 Calls
FRX has pulled back from its recent 52-week high.  There hasn’t been any news, so this looks like profit taking after a two month surge in FRX’s stock.  But we’ve still got plenty of time.  So hold tight for now.  Resistance is at $35 and $40.  Support is at $30 and $27.50.

  ADBE January 2011 $27 Calls
ADBE’s impressive run continues.  Our option is surging to a new peak gain of 117% today!  ADBE is coming into a technical resistance area.  It has had trouble breaking above $30 since July.  Conservative traders should go ahead and lock in their profits now.  Aggressive traders may want to hold out for a bigger gain.  The next resistance is at $33.50.  Support is at $25 and $22.50.

  PEGA March 2011 $25 Calls
PEGA finally reported 3rd quarter results today.  And as I expected, it was another record setting quarter.  And management is expecting strong growth in 2011.  The stock shot up 20% today.  It easily erased what it had given back over the last month.  Our option is back up to a new peak gain of 327%!  Aggressive traders should continue holding for the next leg higher.  The next resistance is at $35.  Support is at $16 and $15.

Category: EOT Update

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