EOT Position Update – November 25, 2015
Market Snapshot
Happy Thanksgiving!
Stocks rebounded in the early days of last week as world powers united against ISIS. But this week the market stagnated on low volume heading into the holiday.
The uptick in the S&P 500 is largely being fueled by a few mega-cap stocks. The vast majority of stocks aren’t participating in the stock market rally.
One bullish sign for investors was last week’s leading economic index. The index showed an increase of 0.6% in October. This typically means economic growth will accelerate in the months ahead.
But there are still headwinds from the strong US Dollar, weak commodity prices, and slowing growth outside of the US.
There are more than a few red flags about the future growth and profitability for many US sectors. For instance, low commodity prices (including oil, ag commodities, copper, gold, and silver) are hurting the energy sector and basic materials sector.
Now those headwinds are spilling over into negative patterns for industrials that make equipment for them and the banks that lend them money.
What’s more, consumer behavior seems to have fundamentally changed. They’re spending less money on clothing and most material items. This is negative for most retailers. At the same time, consumers are spending more on technology, cars (funded by sub-prime loans), and dining out.
These are disruptive forces for many companies. And it remains to be seen how far the impact of depressed commodity prices and changing consumer behavior will ripple through the economy.
Now, 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.
KR January 16th 2016 2015 $37.50 Calls
KR is holding steady in its established trading range. But a breakout to the upside should be in the cards for the 2nd largest grocery store chain in the country. Support is at $35.00 and $34.00. Resistance is at $39.25 and $42.00.
Category: EOT Update
