Weekly Update: August 21, 2014

| August 21, 2014

Weekly Update:  August 21, 2014


What To Watch

Despite plenty of global turmoil, US equities barely seem to have missed a beat. The S&P 500 closed at a record high of 1,992 today, just points away from the highly anticipated 2,000 level. The benchmark index is up nearly 9% on the year.

It appears investors still have faith in US equities, at least the big companies. While the rest of the world is dealing with military conflicts and struggling economies, the US economy continues to plow forward.

The conflict in Ukraine has settled somewhat, but could become volatile in a hurry. Airstrikes in Iraq seem to have helped so far, but the situation there is far from resolved. And, Israel and Gaza are back at it again. Meanwhile, economies are under pressure in Europe, China, and Japan.

Nevertheless, the domestic economy looks just fine. The job market continues to show signs of strength, while housing has rebounded. Moreover, there doesn’t appear to be any danger of inflation.

There are still catalysts for volatility out there, so pay attention to the signals. But overall, the US markets are looking as bullish as ever.


Portfolio Recap

Position #1: Altera (ALTR) September $34 Calls

Price Paid: $1.35

Current Price: $1.25

Time Until Expiration: 30 days

As I mentioned last week, there wasn’t a whole lot of resistance for ALTR if it broke through the 50-day moving average. And that’s exactly what happened. The stock has soared to almost $35 per share and our options are back around the price we bought them. With a full month to go, we need just one more move higher to start making decent profits on our calls.


Position #2: Rocket Fuel (FUEL) September $20 Calls

Price Paid: $1.10

Current Price: $0.10

Time Until Expiration: 30 days

FUEL has gotten punished by investors lately – but for really no good reasons. The ad tech space is out of favor right now, but the company itself has done nothing wrong. I expect a rebound soon as this company is only growing and improving. Plus, it’s a volatile stock so it could turn around very quickly.


Position #3: O’Reilly Automotive (ORLY) September $150 Puts

Price Paid: $1.37

Current Price: $1.00

Time Until Expiration: 30 days

As I suspected, ORLY tested the key double-top resistance level and failed to break through. The next big move in this stock should be down. And, we have a full month to cash in on our puts.


Category: OTW Weekly Updates