Weekly Update: September 24, 2015

| September 24, 2015

Weekly Update:  September 24, 2015

 

What To Watch

Well, it’s been two weeks since my last update, but the last two weeks have been a lot of like.  The overall market is still choppy and volatile, but not nearly as much as it had been during the correction in late August.  We seem to have settled into a new range –under both the 200-day and 50-day moving average.  Overall, the S&P 500 is down nearly 4.5% for the year.

Volatility looked like it was going to evaporate heading into the September Fed meeting.  After all, what the Fed was going to do with rates was the big question on everyone’s mind.

However, even though the Fed left rates near zero as expected, uncertainty returned to the market once the Fed announced results.  Apparently, investors aren’t going to be happy until they know EXACTLY when rates are going to start to go up.  Of course, a lot of that has to do with emerging markets stabilizing – which is who knows when.

Meanwhile, the US economy is still doing just fine.  The jobless rate remains low.  And, spending should kick up heading into the holiday season.  Keep in mind, as long as there’s no inflation (and there clearly isn’t), there’s no reason to worry about ultra-low rates.  Most importantly, consumers need to keep spending money.

I’ll be sending out the next new trade tomorrow.

 

Portfolio Recap

Position #1: King Digital Entertainment (KING) November 14 Calls

Price Paid: $1.00

Current Price: $0.80

Time Until Expiration: 57 days

KING has mostly moved in step with the market, albeit at a much less volatile rate.  The stock has been hovering around the 20-day moving average for the most part.  With nearly two months to go on these calls, there’s easily plenty of time to see a rally.

 

Position #2: Prudential Financial (PRU) October 82.50 Calls

Price Paid: $1.30

Current Price: $0.25

Time Until Expiration: 22 days

PRU has gotten hit pretty hard, but not because of anything stock specific.  Financials have sold off with the market, and seem to be taking the brunt of investor uncertainty when it comes to lower rates.  Really, it shouldn’t impact insurance companies to that extent, but no one ever claimed investors were logical all the time.  For now, we need to see a sharp recovery with three weeks to go.

 

Position #3: Cisco Systems (CSCO) October 26 Calls

Price Paid: $0.68

Current Price: $0.25

Time Until Expiration: 22 days

CSCO hasn’t sold off to the extent of PRU, but it has moved down in line with the broad market.  Fortunately, we need the networking giant to only rebound about a half dollar to get back to the money.  From there, it’s not a long shot for the share price to make a run at the 50-day moving average (around $27).  We still have three weeks for this to play out.

 

Category: OTW Weekly Updates