Update: January 11, 2016

| January 11, 2016

January 11, 2016

 

Portfolio Update

Ouch.  That’s not the way we wanted to see 2016 start, at least if you’re a stock investor.  The year has opened with the worst start in history (in terms of a 5-trading day period).  The S&P 500 is down 6.5%, the Dow is also down 6%, and oil is already down 16%.  About the only thing moving higher is volatility, with the VIX up 36% to kick off the year.

There are several concerns spooking the market, but the biggest two have been China and the price of oil.  Concerns over the Chinese economy have tanked the stock market over there, and the fallout has hurt stocks all over the world.  It doesn’t help that oil keeps losing ground (seemingly by the day).  Investors are worried that cheap oil is a sign another recession is coming.

On the other hand, the jobs news in the US continues to impress.  The one thing that can be said about America’s resilient economy is how well it has done creating jobs.  The December jobs number blew away expectations.  If more jobs and cheap gas can result in higher spending, the US economy should be okay moving forward.

I seemed to have jumped the gun by going bullish with our first trading theme last week.  I went with undervalued stocks, but the market just kept going down after the fact.  For next week’s theme, I’ll be considerably more cautious in my approach as the market does not appear ready for a sustained rally.

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 12 Calls – CCJ is one of our call positions which has survived the onslaught. The stock is down with the overall market, but has held its ground relatively well.  I believe nuclear power is going to get a big boost this year and CCJ will be the biggest beneficiary.  Hold tight on this one for now.

 

  • Cisco Systems (CSCO) March 27 Calls – CSCO has gotten hit along with most Dow stocks. We’ve hit our conservative exit point for risk control, but not by much.  Aggressive traders should still be in this stock and I believe it is ripe for a big rebound.  The share price looks very cheap at these levels.

 

  • PG&E (PCG) March 50 Puts – PCG is one of our few put positions, so it’s in decent shape here. Granted, utilities tend to act as safety stocks, so the share price hasn’t dropped as much as we’d like to see.   But, the stock is well off its highs and is clearly in a downtrend.  We have until March for these options and they’ll be nice to hold on to while the market remains volatile.

 

Category: AOA Updates

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