EOT Position Update – November 4, 2009

| November 4, 2009

November 4, 2009

Market Snapshot

Can markets have a case of obsessive-compulsive disorder?  Unfortunately, it happens all too often.  Investors can ignore the big picture to focus on one specific piece of the puzzle.

Right now, investors’ focus is solely on the U.S. Dollar.

The day-to-day and even minute-to-minute swings in the U.S. Dollar’s exchange rate are driving the market.  We’re seeing an inverse relationship with the Dollar and stock prices.

When the Dollar goes up, stocks go down.  When the Dollar goes down, stocks go up.

There’s no telling how long the market’s fascination with the Dollar’s exchange rate will last.  But rest assured, the market’s attention will soon turn to something else.

For now, we’ll focus on the Dollar.  It’s been falling since the stock market bottomed in March.  And it should continue falling as long as the Fed keeps interest rates near zero.  And according to today’s Fed announcement, that could be for quite some time.

However, the Dollar had staged a short term rally the last few weeks.  As a result, the stock market turned lower.

The Dollar rally and the stock market pullback both look like they’ve reached a turning point.

I’m expecting the U.S. Dollar to go lower from here.  And the stock market should resume its march higher as well.  That’s great news for our call options.

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.

  MOT Apr 2010 $10 CALLS (MOTDB)
Motorola is our latest trade we rolled out earlier this week.  Look for their two new smartphones to power sales and earnings past analysts’ Q4 estimates.  Hold tight for now.  Resistance is at $10 and $12.  Support is at $7.75 and $7.

  MCRS Mar 2010 $30 CALLS (MFKCF)
MCRS was caught up in the market pullback the last few weeks.  The stock appears to have turned the corner and is heading higher once again.  We’ve got plenty of time for this trade to work out.  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 has pulled back with the rest of the market.  It’s testing support of the uptrend. I’m expecting TMO to move higher from here.  Aggressive traders should hold on for a rebound off this support level.  The next resistance is at $50.  Support is at $41.50 and $38.50.

  MMM Jan 2010 $75 CALLS (MMMAO)
3M has held up well as the rest of the market pulled back from the recent highs.  The stock found support where the uptrend and 50-day moving average converged. 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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