Update: September 2, 2014

September 2, 2014

 

Portfolio Update

After climbing all the way back to record highs over the last couple weeks, US equities have been fairly quiet the past few days. The S&P 500 is up about 9.5% on the year while the Dow Industrials are only up about 4.5%. Overall, US stocks are still the safest equities to invest in the world.

Basically, much of the rest of the world is either dealing with economic or political woes. Obviously in some cases, the political situations have devolved into military conflict. The most serious conflict is occurring between Ukraine and Russia, with Russian forces recently invading its neighbor.

From an investor perspective, the biggest issue is the potential that this conflict could spread into something much bigger. I doubt Russia wants to go to war, but the conflict needs to be closely monitored.

In the meantime, the US is still conducting operations in Iraq, which have been successful so far. And, there’s a longer-term cease fire in place between Israel and Gaza.

Economically speaking, Europe, China, and Japan are dealing with headwinds. Europe is the most worrisome at this point. The ECB may enact its own form of QE, which could help the situation.

In the US, the economy remains in good shape. Manufacturing is at a three year high. Unemployment continues its downward trend. And, GDP figures for Q2 were revised higher. I expect stocks to remain resilient as long as the US economy continues to show positive momentum.

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.

• FirstEnergy (FE) October 32 Calls – FE shares have staged an incredible turnaround in recent weeks. After touching $30 in early August, the share price has gone nearly straight up to above $34. That’s above our exit point for conservative traders. At Friday’s peak, the options were 115% winners!

 

• SunPower (SPWR) September 35 Calls – SPWR is another stock that’s had an impressive rebound since early August. The stock price touched $32 briefly before soaring higher to over $38. That’s our exit point for conservative traders. The options have peaked (so far) today at 60% gains. Aggressive traders can keep holding to $42 per share.

 

• American Superconductor (AMSC) January 2 Calls – AMSC briefly spiked above $2 per share, but has mostly held steady. I don’t expect this small cap to move all that much except on big news.   However, if big news does hit the wire, the share price could jump in a hurry. Don’t forget, these options didn’t cost much and we have them until January.

 

Category: AOA Updates