Update: December 14, 2015

| December 14, 2015

December 14, 2015

 

Portfolio Update

Editor’s Note:  Our offices will be closed for the holidays for the final two weeks of December.  There will be nothing published during that time.  We’ll get things restarted in January with a new trade theme. Hope you all have a happy holiday season!

It’s been a fairly rocky last couple weeks for stocks.  The S&P 500 is down almost 4% just in the last week alone.  The benchmark index is now slightly negative on the year.  I still think we’ll finish the year in the black, but any hopes of a huge December rally have probably passed.

The biggest concern lately has been the plunging price of oil.  Investors are concerned that dropping oil prices are a sign of weak demand… meaning the global economy is weakening even further.  I tend to think it’s a major supply issue and isn’t as big of a deal as many think.  Still, it’s a variable to consider – and cheap oil is definitely not helping energy companies.  It also hasn’t seemed to spark consumer spending in the US, yet.

On the other hand, the jobs news in the US continues to shine.  The one thing that can be said about America’s resilient economy is how well it has done creating jobs.  Now, the next step is for that to translate into more spending (and higher wages), and we’ll be on the fast track to growth.

Once again, the biggest news item in December will be what the Fed says (and does) about interest rates.  Economists still expect a 25 basis point increase at this point.  The more important info will be what the Fed says about rates (and the economy) looking ahead.

Let’s take a look at some portfolio highlights…

 

Portfolio Highlights

Just a quick note:  We won’t update every open position every update.  I try to focus on the positions that have some significant news or price movement.

  • Cameco (CCJ) March Calls – CCJ has dropped along with the broad market but is still in great position heading into the 2016. Before pulling back, we hit peak gains of 33% in the first week of trade.  There will be plenty of opportunities to best that mark as we have until March on these options.  With the climate change deal on the table, I think nuclear power is about to get more attention – which is great news for CCJ.

 

  • Blackstone (BX) March 31 Calls – I’m scratching my head on this one. BX is getting hammered and we’ve been taken out of our position already.  This, despite the group just raising $18 billion for a new fund.  So, there’s plenty of demand for the company’s product but investors are jumping ship.  Doesn’t make a whole lot of sense to me.  At least our March options should have plenty of value left since we hit our risk-control exit point so early.

 

  • Bed Bath & Beyond (BBBY) January 55 Calls – BBBY has pulled back with the overall market but there’s a silver lining. Compared to other retail companies, the stock has held its ground fairly well and doesn’t appear to be ready to capitulate.  With our options expiring in January, there’s still plenty of time for a turnaround.

 

Category: AOA Updates

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