EOT Position Update – September 26, 2012
September 26, 2012
Market Snapshot
US stocks are trading lower, extending yesterday’s losses as worries about the global economy lead investors out of equities and commodities and into safer havens, including Treasuries and the US Dollar.
Back again to the global concern…
European shares plunged yesterday as investors sought safety away from Euro Zone risk.
In addition, pressure continues to mount on the Spanish government ahead of Friday’s budget.
Catalonia has called for a snap election, a move that has been read as a clear threat of secession from the rest of the country.
In Greece, public and private sector unions called for a 24-hour strike yesterday, with protests planned in central Athens. Greece-sensitive French banks plummeted and Spanish banking giant Santander (SAN) is also deep in the red, despite a fairly successful pricing of its Mexican unit.
Lastly on the global front, the US Dollar and the Yen rose against the common currency, squeezing commodity prices and dragging mining stocks lower.
Back home…
The markets pulled back yesterday and the S&P closed below 1,450 for the first time in a couple weeks. But you know what? This is what we’ve been waiting for. This represents a technical retest with support looking to be around 1,430, which is the 20-day moving average.
Let’s not be surprised if we see a move a little lower from here. But remember, there’s no reason to panic as long as we stay above that support level.
Bottom line…
If weakness continues, we will have plenty of time to take advantage of it as October expiration has just started, so there’s no reason to rush into anything.
We’ll be closely watching for any changes throughout the rest of the week and to see what patterns develop.
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.
NPSP October 2012 $9 Calls
NPSP is our newest trade. I recommended it only last week and it has been up as high as 38%. Congratulations for all of you who got in. This pharmaceutical company is very ripe for an acquisition and/or an FDA approval that is scheduled right before the October expiration cycle. This is one of the reasons the premiums are a bit elevated. Even though our calls have come down a fraction, no worries, I have my eye on it and will update you as needed. Until then, we are holding these options for something spectacular to occur! Remember, we want this stock to rise in value. Support is at $7.75 and $7.25. Resistance is at $9.25 and again at $9.75.
AXP October 2012 $60 Calls
AXP has been up as high as 45% since our recommendation. Although it has come off of that level, we still have plenty of time for our call options. We still have six weeks until the October expiration and AXP has a very good chance of moving up and over our strike price of $60. Time is on our side and we’ll take advantage of that moving forward as we watch this stock continue to outperform and profit from its rising stock price. So, obviously we’re going to hold these call options for larger gains! Remember, we want this stock to rise in value. Support is at $55.50 and $54.00. Resistance is at $60 and again at $62.
Category: EOT Update
