Update: March 9, 2015

March 9, 2015

 

Portfolio Update

After marching all the way to record highs, US equities have taken a big step back the past few days. The S&P 500 is now up only about 1% on the year. However, it appears the 50-day moving average is providing necessary support. Meanwhile, the current bull market has gone on for a full six years.

Of course, if you think about where we started after the 2008-2009 financial crisis, we had a lot of ground to make up.

The catalyst for the recent selloff in stock was actually good news. The February jobs number came in significantly higher than expected, and the US job market is looking as healthy as it’s been in years. It prompted investors to assume the Fed will be raising rates sooner than first expected… thus leading to the selloff.

However, while the jobs numbers look good, we’re still lagging in wage growth. Without wage growth, there’s virtually no chance of inflation, and no reason to raise rates. I don’t see the Fed fully committing to a rate hike until there are real signs of inflation. The coming week is a big one for economic news, so we’ll have a clearer picture of the economy as the next few days unfold.

Now, let’s take a look at the 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.

• Freeport McMoRan (FCX) May 18 Calls – FCX has pulled back a little from its recent highs, but not before reaching even bigger gains for aggressive traders. At its peak, our position has gained as much as 228%. Since these are May calls, aggressive traders can continue holding for bigger upside potential.

 

• General Cable (BGC) May 15 Calls – We’ve seen a nice uptrend from BGC, which climbed to nearly $16 per share. We’re still about $2 away from our first profit-taking point, but it’s nice to see the stock moving in the right direction. Our options have been as high as 32% winners so far.

 

• Silver Wheaton (SLW) June 24 Calls – SLW has gotten crushed as the price of silver has fallen off a cliff. Conservative investors should have exited already, and aggressive traders are nearing their own exit point for risk-control. While we have until June on these calls, silver and SLW are going to have to make up quite a bit of ground for this position to come back into play.

 

Category: AOA Updates