Update: November 16, 2015

| November 16, 2015

November 16, 2015

 

Portfolio Update

After making a strong comeback from October into early November, US equities pulled back last week on interest rate and economic concerns.  In fact, the S&P 500 fell through the 200-day moving average and nearly hit the 50-day moving average.  However, stocks reversed today to finish 1.5% higher, possibly averting further declines for the time being.

I believe stocks could be range bound for the next couple weeks while we determine how retail sales are going to do over the holiday season.  December is typically a good month for stocks, and we’ll see if that trend holds this year.  In the meantime, the S&P 500 is up about 1.5% for the year so far.

The big news in December is going to be the (probable) rate hike.  The Fed has basically said they’re going to increase rates by the end of the year, and the only meeting left is in December.  A quarter point increase is what’s expected and has basically been priced in.  Perhaps more importantly, what the Fed says in its statement could be even more important.

In the meantime, the economy is chugging along.  News has been very mixed, with seemingly equal amounts of good and bad news.  The good news has been centered around jobs, which continue to be very strong relative to expectations.  Now, we’ll need to see if people start spending money.  This holiday season will be a big test for the consumer.

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.

  • Rackspace (RAX) December 28 Calls – We hit another big winner with RAX, as the stock jumped past our conservative profit-taking point. The stock surge was due to an earnings beat last week.  Peak gains on the trade are 177%.

 

  • JPM Morgan Chase (JPM) December 62.50 Calls – JPM went on a great run (until pulling back with the market last week). Prior to the pullback, we hit both of our profit-taking points in the trade, so everyone should be out for big gains.  The high mark in JPM is 240% gains!

 

  • Foot Locker (FL) January 70 Calls – We’ve been on a very strong run with our picks lately, but FL is the biggest exception. The stock plunged last week as the retail sector got hit hard.  I think the selling is way overdone, but it’s too late for this particular trade.  Everyone should have been stopped out at this point as part of our risk control strategy.

 

Category: AOA Updates

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