Weekly Update: November 27, 2013
Weekly Update: November 27, 2013
What To Watch
As I mentioned last week, we’re sending this update a day early due to the Thanksgiving holiday tomorrow. So is everyone ready for some turkey?
The equity markets certainly have a lot to be thankful for, with many of the major indices trading at record highs. The S&P 500 is up nearly 29% for the year, the DJIA is up over 25%, NASDAQ 100 is approaching a 31% year-to-date gain, and the Russell 2000 is up 35%. As I’ve said many times this year, it’s a great year to be a US stock investor.
On the economic front, the good news continues to outweigh the bad. Jobless claims dropped to 316,000 this week and continue a very encouraging downward trend. Housing permits also came in surprisingly strong. On the flip side, durable goods orders dropped 2% from last month. However, the big hit was a huge drop in commercial aircraft orders – mostly just delays based on the government shutdown.
Overall, the economy appears to be getting stronger. However, the Fed still seems to be concerned about the tepid pace of growth. As such, I don’t expect to see the start of QE tapering to occur until early next year at the soonest.
In other words, the good times should continue to roll on in equities. Happy Thanksgiving!
Portfolio Recap
Position #1: Citrix Systems (CTXS) December $65 Calls
Price Paid: $1.39
Current Price: $0.20
Time Until Expiration: 23 days
CTXS has leveled out right around $59 per share. It won’t stay there. The stock’s sitting right at the 20-day moving average and is going to choose a direction in the near future. I believe that direction will be up towards the 50- and 200-day moving averages. If that happens in the next week or two, we’ll have a chance to cash in on our calls. Let’s see what next week brings.
Position #2: Dominion (D) December $65 Puts
Price Paid: $1.45
Current Price: $1.30
Time Until Expiration: 23 days
As I’ve been saying, D looked like a reversal was in store, so it’s not a surprise to see the stock headed right back towards the 50-day moving average. The share price is sitting right at $65, our strike price. From here on down, we’ll likely be looking at profits on our position. I think the next stop is $64 – a level where we’ll likely cash out.
Position #3: Millennial Media (MM) February $7.50 Calls
Price Paid: $0.65
Current Price: $0.65
Time Until Expiration: 86 days
MM didn’t break through the 20-day moving average this time around, but it’s certainly going to test it again soon. Once that happens, the next stop is around $7.00 a share, and after that resistance is close to $8.00. With just under three months to go on these options, we can ride these calls all the way up.
Position #4: Cree (CREE) January $60 Calls
Price Paid: $1.52
Current Price: $1.60
Time Until Expiration: 51 days
CREE has moved up a little since our entry yesterday. The LED producer has a bright future ahead and is still trading under all three major moving averages. We’ve got until January expiration for this trade to play out.
Category: OTW Weekly Updates
