Weekly Update: July 18, 2013

| July 18, 2013

Weekly Update:  July 18, 2013


What To Watch

Well, I’m back on a normal publishing schedule and stocks appear to be back to their bull market ways.  After spooking the markets with tapering talk, Bernanke has soothed fears of an early end to the Fed’s bond buying.

This week, Bernanke said the Fed isn’t on a preset course and the data will determine when the bond buying will slow down or stop entirely.  That calmed investors who were worried the punch bowl may be yanked sooner than necessary, before a full economic recovery.

And while the economy is certainly performing better, it still has a ways to go.  Keep in mind, the Fed’s shooting for unemployment to be at 6.5% or below.  That’s probably a year away at least, unless the job market improves much faster than expected.

Although, jobless claims did come in better than projected today.  This week’s claims dropped to 334,000, the lowest total since early May and better than the 345,000 tabbed by analysts.  I believe the continued (reasonably) low levels of claims are a good sign the economy is healing.

On the flip side, the housing market took a hit with housing starts and building permits coming in far below expectations.  Once again, the economy is doing better, but it’s nowhere near pre-Recession levels.

In the meantime, it’s time to focus on earnings.  This week has already been interesting, with both eBay (EBAY) and Intel (INTC) taking it on the chin after disappointing outlooks.  Next week will be an even bigger week for major earnings releases.  And as always, I’ll be scanning the data for trade candidates.


Portfolio Recap

Position #1:  Cliffs Natural Resources (CLF) July $20 Calls

Price Paid: $1.11

Current Price: $0.01

Time Until Expiration: 1 day

I’m still very irritated by CLF.  The shares have recovered from its lows – but too little too late.  And, the stock continues to be one of the more undervalued large caps on the market, both fundamentally and technically.  There’s going to be a good trade to be had on CLF, this one just wasn’t it.  I plan on finding another CLF opportunity in the near future.


Position #2: Qualcomm (QCOM) August $65 Calls

Price Paid: $1.05

Current Price: $0.45

Time Until Expiration: 29 days

QCOM had made a nice recovery this week – all the way back to the 50-day moving average.  But, the stock is getting creamed today because of Intel’s poor outlook.  However, this could be nothing more than an overreaction.  QCOM doesn’t post earnings until next week and often sees different supply/demand dynamics than Intel.

We’re going to at least hold these calls through earnings and see what the news brings.


Position #3: Freeport-McMoRan (FCX) September $29 Calls

Price Paid: $1.09

Current Price: $1.10

Time Until Expiration: 64 days

Our FCX options from yesterday haven’t moved from our buy price – but the stock is up about 1% today as of this writing.  Keep in mind, with farther out options like these September calls, it will take more of a stock move for the option price to react.  Of course, that will change as the stock climbs above $29 and the options are in the money.  Plus, we’re already closing in on $29 and it’s just July!


Category: OTW Weekly Updates