EOT Position Update – November 11, 2009

| November 11, 2009

November 11, 2009

Market Snapshot

The market leadership’s been flipped on its head the last few months.  Remember during the early stages of the market rally, the NASDAQ led the markets higher.  At the same time, the blue chips in the Dow were lagging behind.

Now the exact opposite is true.

The blue chips are leading the way while the tech heavy NASDAQ’s lagging behind. Just this week, the Dow climbed to a new YTD high while the NASDAQ’s still struggling to reach its October high.

The reversal of fortunes tells us a lot.  The indexes have rebounded in different ways from their lows.  You see, the NASDAQ has already erased about 60% of the losses from the markets peak to the March low while the Dow’s only reclaimed half of its losses.

Right now the blue chips are playing catch-up.

The shift in market leadership is also another sign the recession’s over.  It’s no secret the large caps need overall economic improvement to grow revenue and earnings.  The fact that their stocks are now leading the markets tells me the big money’s betting on strong economic growth.

Now for 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.

  VIT Feb 2010 $17.50 CALLS (VITBW)
VIT is our most recent trade I sent out this morning.  Take a look at the trade alert or our website for more details.  Resistance is at $21 and $22.50.  Support is at $14.50 and $12.65.

  MOT Apr 2010 $10 CALLS (MOTDB)
Motorola and Verizon (VZ) said they sold ‘a lot’ of Droid smartphones in the first two days.  Analysts are speculating the number sold is around 100,000.  Depending on which analyst you ask, this number is good or bad.  I think it’s off to a good start.  But we’ll need to see total sales eclipse 1 million before the end of the year to get the pop we’re looking for.  Hold tight for now.  Resistance is at $10 and $12.  Support is at $7.75 and $7.

  MCRS Mar 2010 $30 CALLS (MFKCF)
MCRS has bounced off of support and is moving higher.  They continue to score big wins in the sales column.  More and more hotels and retailers are implementing MCRS’ state of the art customer management software.  But management is downplaying the results by keeping their revenue and earnings guidance steady.  We still have plenty of time, hold tight for now.  Resistance is at $30.50 and $33.  Support is at $25 and $22.50.

  TMO Dec 2009 $45 CALLS (TMOLI)
TMO is rebounding from very oversold levels.  But it’s stalled out around the 50-day moving average.  The lower than normal trading volumes indicate a lack of buyers – not selling pressure – is keeping TMO stuck in the muck.  Aggressive traders may want to hold on for an end of year market rally.  The next resistance is at $50.  Support is at $41.50 and $38.50.

  MMM Jan 2010 $75 CALLS (MMMAO)
3M’s on a roll as it strikes new business deals and expands its reach into China.  The stock’s rallied 8% from $73 to $79 before being turned back at the October high today. I think 3M will eventually push through to our next resistance level.  Aggressive traders should hold out for the next leg higher.  The next resistance is at $80.  Support is at $65 and $60.

Category: EOT Update

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