Weekly Update: May 29, 2014
Weekly Update: May 29, 2014
What To Watch
As I mentioned last week, it’s been a very slow period for financial markets in terms of market-moving news. The S&P 500 once again closed at record-highs today, settling around 1,920. Is 2,000 in our future?
It’s been a slow grind upward for stocks, which seem to be moving more on inertia than actual news. It won’t surprise me if equities continue this sideways/upward motion through the summer. We may have some minor pullbacks, but I don’t see a whole lot of negatives coming up – unless one of these geopolitical hotspots spills over into a full-out, global crisis.
Keep in mind, volatility is still sitting at very low levels. However, the major volatility benchmarks may not be taking the full picture into account. Small caps are still not performing as well as large caps. And, bond yields continue to drop. In other words, investors are still being cautious.
Like I said before, I don’t expect a major selloff over the summer months, but anything is possible. It would take a major negative catalyst, which I just don’t anticipate at this point.
In the meantime, we’ll continue to trade and maintain our portfolio, which we just infused with three new positions.
Portfolio Recap
Position #1: Dunkin’ Brands (DNKN) June $47.50 Calls
Price Paid: $1.15
Current Price: $0.15
Time Until Expiration: 22 days
So far, DNKN hasn’t been able to break higher. The shares pulled back a bit today, but remain above key support. We’ll need to see a move back to $46 or higher next week in order for this trade to have a realistic shot at making money.
Position #2: Goldman Sachs (GS) June 21st $165 Calls
Price Paid: $1.39
Current Price: $0.75
Time Until Expiration: 22 days
GS has remained above $160, which is good news. So far, the shares can’t quite break the key 200-day moving average level. As long as the stock keeps trying to move higher, we should see a breakthrough in the near future.
Position #3: Target (TGT) July $60 Calls
Price Paid: $0.94
Current Price: $0.29
Time Until Expiration: 50 days
TGT hasn’t done much since last week. We’re still in a holding pattern while we wait for the stock to rebound. Once again, we bought July calls in order to give this trade time to develop. All signs point towards a coming rally in the stock.
Position #4: Abecrombie & Fitch (ANF) June 21st $36 Puts
Price Paid: $1.90
Current Price: $0.75
Time Until Expiration: 22 days
ANF plunged prior to earnings, all the way below $35. However, earnings news came in a bit better than expected and the stock rebounded today. I think it’s going to be a short-lived rally. Overall, the numbers for ANF don’t look good. It’s just a matter of time before the stock sells off again. Keep in mind, we still have three weeks left on our puts.
Position #5: Medallion Financial (TAXI) July $12.50 Calls
Price Paid: $1.20
Current Price: $1.20
Time Until Expiration: 50 days
We just bought these calls as part of a special, triple-trade alert. We’ll update the position in more detail next week.
Position #6: THL Credit (TCRD) July $12.50 Calls
Price Paid: $1.05
Current Price: $1.05
Time Until Expiration: 50 days
We just bought these calls as part of a special, triple-trade alert. We’ll update the position in more detail next week.
Position #7: Pacific Coast Oil Trust (ROYT) July $12.50 Calls
Price Paid: $0.95
Current Price: $0.95
Time Until Expiration: 50 days
We just bought these calls as part of a special, triple-trade alert. We’ll update the position in more detail next week.
Category: OTW Weekly Updates
