Position Update
Strong Earnings, Weak Market
Dear Bottarelli Research Member,
Good morning. To be perfectly honest with you, I’m not getting a warm and fuzzy feeling about this market. Both Intel and JP Morgan reported numbers that “beat” expectations, but in response the major market averages are opening the day weaker.
In other words, Wall Street is saying that any good news has already been priced in, which sets up a classic “sell on news” situation. Therefore, we must proceed with caution. In many respects, that’s why we snagged the SDS February 34 Calls (SSH BH) yesterday afternoon for $0.93. As I write today, these calls have ticked up to $1.06, good for a quick 13% gain. Hold for more upside.
On the flip-side, we’re still holding upside call plays via our FDX February 90 Calls (FDX BR) and our WHR February 85 Calls (OFW BQ).I still like both charts, so let’s remain patient. If the market can get some traction, both WHR and FDX have room to move up. Of course, if we see a pop, the safe play would be to reduce our upside exposure and lock in any modest gains. I’ll be watching for a re-test of today’s high to execute this plan.
At the same time, keep an eye on Green Mountain (GMCR – NASDAQ). If the one-day FTC news has now been priced in, we could have an opportunity to quickly make up for yesterday’s unexpected dip. More to come.
Until then…
Lock and load!
Sincerely,
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