EOT Position Update – October 21, 2009

| October 21, 2009

October 21, 2009

Market Snapshot

Earnings season is underway.  I’ve noticed something odd and it has me a bit concerned.

We’ve seen some of the market leaders like Intel (INTC), Alcoa (AA), Goldman Sachs (GS), Apple (AAPL), and Google (GOOG) blow estimates away.  At face value, this is great news.

Their stocks jumped higher on the initial announcement.  But then something interesting happened (and it’s not a good sign).  Intel, Alcoa, and Goldman started giving back their gains.  They’ve fallen back to where they were before they announced earnings.

If Apple and Google follow the same path, watch out for a market correction… These might be early signs.  I’ll be keeping a close eye on these two to see how things play out.

Remember to keep a close eye on your open positions when they’re reporting earnings. (I already talked about ‘selling the rumor’ by locking in gains before they report.)  You might also consider selling if we get a big price spike the day after they announce, even if it doesn’t trade up to a resistance level.

You’ll miss out on some gains if the stock continues to run.  But you won’t be kicking yourself if they follow the same price action and move lower later on.

Keep an eye out for a new trade later this week.

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.

  TMO Dec 2009 $45 CALLS (TMOLI)
TMO’s moving higher heading into their earnings report on Thursday.  It traded through our first resistance level.  Congratulations to everyone locking in a 76% gain!  Aggressive traders should hold on for the earnings report tomorrow.  The next resistance is at $50.  Support is at $41.50 and $38.50.

  TQNT Feb 2010 $7.50 CALLS (TQNBU)
TQNT was awarded a $16 million contract to develop circuits for use in defense and aerospace applications.  The news wasn’t enough to move the stock.  It’s chopping around between $8 and $8.50.  They’ll report earnings today after the markets close. Hold tight for the earnings report.  Resistance is at $9 and $11.  Support is at $6.75 and $6.

  ININ Dec 2009 $20 CALLS (NQXLD)
ININ is trading flat after a big jump last week.  They’ll report their quarterly earnings on Monday.  Aggressive traders should hold out for the earnings announcement.  The next resistance is at $25.  Support is at $16.50 and $14.

  MMM Jan 2010 $75 CALLS (MMMAO)
3M reports Q3 earnings tomorrow before the market opens.  I think they’ll beat analysts’ estimates… Here’s why.  60% of their revenue comes from overseas.  The weak dollar should boost earnings when revenue in other currencies is converted to dollars.  We’ve already traded through our first resistance level.  Aggressive traders should hold out for the earnings report tomorrow.  The next resistance is at $80. Support is at $65 and $60.

Category: EOT Update

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