EOT Position Update – October 10, 2012

| October 10, 2012

October 10, 2012

Market Snapshot

Another week has come and gone… and the bulls are still searching for a reason to buy.

At this point, the lack of a bullish catalyst is glaringly obvious.  And without it, there’s little reason for traders to jump back into their bullish positions.

What’s more, the bearish news just keeps coming.

Traders were clearly disappointed with the IMF’s reduction to its global growth forecast and the World Bank slashing their growth estimate for China this week.

Obviously, slowing economic growth is a strong headwind for corporate profits.

More importantly, traders are waiting to see how corporate earnings fared in the third quarter.

As a result, we’ve seen the pullback in the S&P 500 accelerate to the downside.  It’s broken through support of the uptrend and the 20-day moving average.

We can safely say the uptrend off the June low is over.  But a trend change doesn’t mean the S&P is destined to move much lower.  A more likely scenario is the large cap index will continue to consolidate in a range between support at 1,425 and resistance at 1,460.

However, the market’s next move will most likely be decided by which of the levels breaks first.

If the bears push the S&P below 1,425, we could see a sharp drop off back to the 200-day moving average.  But if bulls push it beyond 1,460, it will likely run to 1,500 before running into resistance.

Either way, we’ll be there to capitalize on the markets next move.

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.

  BGS February 2013 $30 Calls
BGS is off to a slow start.  The secondary offering is weighing down the shares a bit more than anticipated.  It’s closing in on our first support zone around $29.  I’m expecting it to get a nice bounce at this level.  But if it doesn’t hold, conservative traders should sell to conserve capital.  Resistance is at $33.50 and $35.00.  Support is at $29.00 and $28.00.

  NPSP October 2012 $9 Calls
NPSP blew through our $9.75 resistance level last Thursday.  And our option soared to a 65% gain!  Congratulations to everyone on a successful trade.

  BKI October 2012 $30 Calls
BKI is moving lower in lockstep with the broad market.  And to make matters worse, we’re running out of time as the October options expiration day draws closer.  The good news is BKI is trading for $30.79 so these options are in-the-money.  Let’s go ahead and sell these options now to conserve capital.

Category: EOT Update

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