Weekly Update: May 26, 2016

| May 26, 2016

Weekly Update:  May 26, 2016

 

What To Watch

After mostly sideways action this quarter, May is finishing out with a bang. The last couple days have seen some heavy bullish action for a change.  Increases in retail spending and the lack of an impending rate hike have both contributed to the positive vibe.

The major stock indices have thrived since our last update.  The S&P 500 and DJIA both gained 2% in just a week.  The Russell 2000 jumped 2.5% and is now up 1% on the year.  Even the struggling Nasdaq 100 had a great week, picking up 3%.  Tech stocks are finally approaching even for the year.

Meanwhile, crude oil briefly crossed above $50 a barrel. There’s probably not too much more upside in the short-term, but it’s definitely good news for energy companies to see oil back at this price level.  It seemed like it came out of nowhere, but crude oil (up 13%) has almost overtaken gold (up 15%) in terms of year-to-date performance.

Jobless claims once again came in at solid levels, beating expectations.  Even durable goods posted a positive surprise, up 3.4% from last month.  The big gains were related mostly to gains in transportation spending.  Overall, it was a good week for the economy, which certainly needed some good news after a lackluster couple weeks.

Let’s take a look at our positions.

 

Portfolio Recap

Position #1: LifeLock (LOCK) June 11 Puts

Price Paid: $0.30

Time Until Expiration: 21 days

About the only downside to the market surge this week is that it carried most stocks with it higher – even the one we own puts on.  LOCK just barely crossed above our first exit point for risk control.  Aggressive traders can keep holding in case of a company/market turnaround over the next three weeks.

 

Position #2: Foot Locker (FL) June 57.5 Calls

Price Paid: $0.70

Time Until Expiration: 21 days

FL hasn’t done much since we made our trade last week.  We’re still within reasonable striking distance of our strike with three weeks to go.  Basically, we’re just going to wait and see for the time being.

 

Category: OTW Weekly Updates