EOT Position Update – October 31, 2012
October 31, 2012
Market Snapshot
Trick or treat?
The US stock markets reopened today after being closed on Monday and Tuesday because of Hurricane Sandy. It was the first time in 27 years the markets had been closed due to weather trouble.
The reopening of the market on Halloween didn’t seem to spook investors. The S&P started off the day with a solid gain. But the large cap index eventually gave back those gains and finished the day virtually unchanged.
For the most part, trading picked up right where it left off last week. But that’s not necessarily a good thing…
The S&P is still in rough shape from a technical perspective. Remember, it recently broke through support at 1,425. It will have to overcome this resistance if the bulls have any hope of propelling the market back to the recent highs.
But that doesn’t seem likely given the weak 3rd quarter earnings, mixed economic data, a slowing global economy, and the impending fiscal cliff.
What’s more, Sandy’s economic impact is being hotly debated. Early estimates put the total loss in the neighborhood of $30 billion to $50 billion.
Obviously, there’s never a good time to have a hurricane rip through the heart of the global financial system. But given the weakened state of the global economy, there’s almost certain to be some negative repercussions.
And to make matters worse, there’s not much the government can do to ease the pain.
We can’t expect much from politicians in DC who are focused on elections. And the Fed already has interest rates at zero and they just started a new round of asset purchases with QE3.
In other words, investors are likely on their own.
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.
OPEN December 2012 $40 Puts
OPEN is our latest trade. It hasn’t had much time to do anything with the markets closed. But they do report earnings tomorrow. And with their recent history of earnings volatility, we could see a big move. Resistance is at $49.00 and $50.00. Support is at $40.00 and $36.00.
PHM April 2013 $19 Calls
PHM reported earnings last week. EPS came in better than expected but revenues came in a little less than expected. The stock didn’t really react to the news. But there’s no denying the bullish momentum for homebuilders as positive housing data continues to come in. We have lots of time until these options expire in April. Continue holding for the next leg higher. Resistance is at $25.00 and $30.00. Support is at $15.00 and $13.50.
BGS February 2013 $30 Calls
BGS has resumed its uptrend. The stock is back above $30. So, our options are back in-the-money. The bottom line is BGS is a strong company with solid growth and they pay a nice dividend. The combination of growth and income should fuel more upside in the weeks ahead. Aggressive traders should continue holding… Resistance is at $33.50 and $35.00. The next support is at $28.00.
Category: EOT Update
