Weekly Update: July 24, 2014

| July 24, 2014

Weekly Update:  July 24, 2014


What To Watch

US equities seem to have already gotten over the slew of negative international news hitting the wire last week – and are once again heading higher. The S&P 500 is up around a half a percent from last week and is sitting right at its record highs.

Despite the plane crash in Ukraine, the fighting in Israel, and drama in Portugal, investors in US companies just don’t seem that concerned. Perhaps it’s the lack of volume in the markets contributing to the lack of volatility. Or, maybe it’s the strength of the domestic economy.

Once again, economic news has been strong, particularly on the job front. Jobless claims plunged to their lowest levels since 2006. And, retail sales show once again, inflation just isn’t a concern right now.

All in all, I expect the bull market in stocks to continue. Given all the international heat, we could have additional volatility over the coming weeks. But overall, I anticipate the general direction of stocks will be up.

We’ll roll out another trade early next week.


Portfolio Recap

Position #1: Franco-Nevada (FNV) August $55 Puts

Price Paid: $1.38

Current Price: $1.05

Time Until Expiration: 22 days

FNV is finally starting to gain downward momentum. The stock is testing the 20-day moving average. When it breaks through, it should drop all the way to the 50-day moving average around $52. And, that will clearly be good news for us.


Position #2: AGCO (AGCO) August $55 Calls

Price Paid: $0.85

Current Price: $0.50

Time Until Expiration: 22 days

AGCO pulled back a little this week, but is shaping up for a rebound. The stock should be making a run at the 50-day moving average, which is just below our strike price. In addition, this company is trading at a very favorable valuation and should attract the attention of value investors.


Position #3: Altera (ALTR) September $34 Calls

Price Paid: $1.35

Current Price: $1.50

Time Until Expiration: 57 days

Looks like we could have a big winner on our hands with ALTR! The company beat revenue expectations and raised its dividend. That stock is up about 2.5% after hours so far, so we’ll see what it does in the morning. But, this could be a very quick turnaround on the trade (for a nice gain).


Category: OTW Weekly Updates