EOT Position Update – September 5, 2012
September 5, 2012
Market Snapshot
Stocks are seeking direction this morning and are mixed at midday as investors eye economic data along with hopes of stimulus measures in the Euro Zone.
The Labor Department reported revised readings for US nonfarm business productivity and unit labor costs for the second quarter. Productivity increased at an annualized rate of 2.2% during the quarter compared with an initial reading of 1.6%.
The percentage was higher than the expected 1.9% rate.
Unit labor costs fell to a 1.5% gain from the previously reported 1.7% increase, though the reading was still higher than the expected 1.4% rise.
Here’s the kicker…
The productivity numbers point to a slowly growing economy. While further insight into the labor force statistics will be revealed in the several employment data reports scheduled for Thursday and Friday.
The Institute for Supply Management reported that business conditions in New York remained in expansion territory with an index reading of 51.4 in August. However, this number was down from July’s 55.2 reading.
Purchasing volume remained weak, while employment improved slightly. The six-month outlook index for the area remained roughly the same.
Most importantly,
Euro Zone stocks got a lift today as the markets anticipate the European Central Bank’s policy meeting Thursday. There’s hope that the ECB will announce a new bond-purchase program tomorrow while strategically not increasing the money supply.
And as a result, US Treasury prices fell amid this sentiment.
Bottom line…
It’s anyone’s guess what will happen at tomorrow’s meeting, but I wouldn’t hang my hat on it yet. We need to proceed with caution and not put all of our eggs in one basket.
Don’t get greedy!
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.
DRYS September 2012 $2 Calls
DRYS is one of our older trades, but we’re not discounting that. It is still working out very nicely. Remember that DRYS owns dry bulk carries and tankers that operate worldwide. As the global situation improves, DRYS will continue to rise. As far as our call options, they are slightly above what we paid for them, but DRYS has been outperforming its peers lately and we are going to hold this name for larger gains. Remember, we want this stock to rise in value. Support is at $2.10 and $1.90. Resistance is at $2.90 and again at $3.20.
AXP October 2012 $60 Calls
AXP is our newest trade. As a matter of fact, I just recommended it last week. Even though AXP was down slightly today, it really means nothing. 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 large gains! Remember, we want this stock to rise in value. Support is at $55.50 and $54.00. Resistance is at $60.00 and again at $62.00.
Category: EOT Update
