Weekly Update: August 28, 2014

Weekly Update:  August 28, 2014

 

What To Watch

US equities were back to their bullish ways this week, with the S&P 500 cracking the highly anticipated 2,000 level for the first time ever. The benchmark index is now up 9.5% on the year.

Stocks have settled somewhat the last couple days as international news continues to keep a lid on prices. While Israel and Gaza have agreed to a long-term cease fire, the situation in Ukraine appears to be worsening. There is some concern that the conflict with Russia could significantly escalate.

Meanwhile, US economic data have been as good as we’ve come to expect. Q2 GDP was revised upward on better than expected business investment. Durable goods orders soared above expectations. And, jobless claims once again came in better than anticipated.

Market volatility is back to very low levels, although advanced volatility metrics show an upside burst could occur pretty quickly. As always, keep a close eye on volatility in the coming weeks.

I plan to roll out a new trade tomorrow, so watch your inbox for the trade alert.

 

Portfolio Recap

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

Price Paid: $1.35

Current Price: $1.30

Time Until Expiration: 23 days

ALTR has been fighting some resistance below $35 the last couple days, but finally looks to have broken through today. Our call price is right about what we paid initially, with a good three weeks to go. One more solid move higher and we’ll be in position to sell for profit.

 

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

Price Paid: $1.10

Current Price: $0.10

Time Until Expiration: 23 days

FUEL continues to be volatile and has made little progress towards $20 this past week. We’re clearly looking for a big jump higher. This is the type of stock where that could happen in a hurry and we still have three weeks to go. Hold tight for now.

 

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

Price Paid: $1.37

Current Price: $0.55

Time Until Expiration: 23 days

ORLY has also been quite choppy over the last week. It’s been fluctuating in a $2 or $3 range as traders battle support and resistance levels. When this period of see-sawing comes to an end, I believe the ultimate direction of the stock will be down, with resistance not coming until under $150. Stay tuned.

 

Category: OTW Weekly Updates