EOT Position Update – November 21, 2012

| November 21, 2012

November 21, 2012

Market Snapshot

Happy Thanksgiving…

It’s a holiday shortened week with no options trading available on Thursday and the majority of traders taking Friday off as well.

As everyone gets ready to gorge on turkey, cranberries, and pumpkin pie, the S&P 500 is on the upswing.  The large cap index is rebounding from severely oversold conditions.

The rally was long overdue to say the least.  It’s unusual to see the S&P sell off for nearly a month straight.  But that’s exactly what it’s done over the last month.

Unfortunately, the rally has done little to reverse the technical damage the selloff did to the chart of the S&P.

At this point, the short term trend is down with multiple levels of resistance just overhead.  While the longer term trend is up and the recent bounce pushed the index back above the key 200-day moving average.

It’s going to take a few weeks for the conflict of the converging trend lines to resolve.

Here’s the thing…

I get the feeling the bulls are on the verge of wrestling control of the markets from the bears.

The recent wave of selling smacks of portfolio restructuring ahead of the coming tax rate increases.  But that’s only temporary.  And the reality is the fundamentals in the US should allow the corporations to continue growing the bottom line.

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.

  YELP February 2013 $20 Calls
YELP has staged a strong 10% rally since we rolled this trade out last week.  And options hit a high of $2.15.  But this is just the tip of the iceberg… I’m expecting YELP to continue running back toward the recent highs.  And that will fuel some big gains in these call options.  Continue holding for bigger gains… Resistance is at $24.00 and $28.00.  Support is at $15.00 and $13.50.

  PHM April 2013 $19 Calls
The last few days brought some welcome news to the homebuilders.  Housing starts in October jumped 3.6% to their highest level since July of 2008.  The news sparked 6% jump in PHM yesterday.  As expected, our call options are on the upswing as well.  We still have plenty of time for these options to work in our favor.  Continue holding for further upside… Resistance is at $25.00 and $30.00.  Support is at $15.00 and $13.50.

Category: EOT Update

About the Author ()

Comments are closed.