Weekly Update: October 30, 2014

| October 30, 2014

Weekly Update:  October 30, 2014


What To Watch

We seem to be back in bull market mode, which shouldn’t surprise you if you’ve been reading these weekly updates. The US economy is simply too good right now to expect a sustained bear market. The S&P 500 is up another 3% since this time last week, and is also back up to around 9% gains on the year.

Most of the big news this week has been economic or Fed related. The Fed decided to end QE (bond buying) this month as expected. But, the central bank still believes rates will stay at rock bottom for a “considerable time”, which makes investors happy of course.

In economics new, GDP beat expectations by a fair margin. Third quarter GDP came in at 3.5%, much higher than the 3% expected. It’s only the first reading so the number could be revised, but it’s a good sign nonetheless.

Earnings season is starting to wrap up, with most big names out of the way. There still could be some earnings action to come, but nothing like these last three weeks. All eyes will be on macro events, including next month’s election.

I’m looking to roll out another trade tomorrow, so stay tuned.


Portfolio Recap

Position #1: Transocean (RIG) November $37 Calls

Price Paid: $1.28

Current Price: $0.10

Time Until Expiration: 23 days

We’re starting to run out of time on these calls, so RIG needs to get moving. The price of oil needs to rebound somewhat for the stock to turn higher, most likely. However, RIG is so cheap right now there still could be a buying surge from value investors. Regardless, we have three weeks for this stock to make some noise.


Position #2: Cliffs Natural Resources (CLF) December $10 Calls

Price Paid: $1.11

Current Price: $1.46

Time Until Expiration: 51 days

That’s a nice week from CLF! The company shot above our strike price on better than expected earnings news. There’s still room to climb, but our calls are currently 32% winners. If the stock breaks through the 50-day moving average, there’s no resistance until about $16. We have over 50 days to give this one a shot at huge gains.


Position #3: Travelzoo (TZOO) December $12.50 Calls

Price Paid: $0.51

Current Price: $0.68

Time Until Expiration: 51 days

Nice start to our TZOO trade. The stock climbed over $13 since our trade, and is still sitting above our strike. TZOO is probably going to trade with overall tech/Internet stocks for now, although value investors could jump on this one and push it higher. The trade doesn’t expire until December.


Category: OTW Weekly Updates