Position Maintenance
Sell AEM & CF
Dear Bottarelli Research Member,
Good morning. As I’ve previously reported, the market continues to fearlessly inch higher on low-volume. Thus far, not even key reversals last week just under Dow 11,000 have put any sort of fear into the bulls. As of today, for example, the S&P 500 has gone 24 sessions without a 1% correction, which is the longest such streak during this bull market run. Barron’s columnist Kopin Tan describes it perfectly when he writes, “the market looks too hot to chase and too strong to short.”
A few trading notes to begin the week…
The markets are closed this Friday, which is significant because that’s when a high-profile jobs report is scheduled to be released. The effects of this report should have a big impact on how trading opens one week from today.
Very quietly, the “Bond Market Vigilantes” stepped back into the markets to speak out against the endless supply of sovereign debt that’s being offered. These Treasury moves affect equities because as U.S. Treasury Bonds increase rates (to attract foreign buyers), the higher rates take investing dollars away from stocks. This is something we’ll keep an eye on going forward.
Also, the sinking of the South Korean Naval Ship off the coast near North Korea brought increased attention to defense stocks like Lockheed Martin Corporation (LMT – NYSE). If a trading opportunity arises, you’ll be the first to know.
We also have Mosaic (MOS – NYSE) scheduled to report their Q3 earnings on Thursday, April 1st. Although the strike price increments are not what I’d prefer, we might be able to run an earnings strangle on this high-flyer. More to come.
In the meantime, it’s time to do some house-cleaning. Specifically, the CF April 90 Puts (O:CF 10P90.00) officially hit our $1.60 stop on Friday. If you have not yet done so, it’s time to close this position down. Sell. Now that CF has hammered out a strong support level, we have a better sense of how this one trades. We’ll recover this trade going forward.
Also, I don’t like the movements on AEM. I thought that central bankers would try pushing gold prices lower, but their attempts have been rejected. Therefore, let’s cut off our AEM April 55 Puts (O:AEM 10P55.00) at the knees and close the position. Sell.
We also have AMZN April 135 Calls (O:AMZN 10D135.00) and GMCR April 95 Calls (O:GMCR 10D95.00), which we’ll continue to hold. If the markets continue their upward movement, which is how things appear to be progressing, we’ll be in good shape.
As always, I’ll follow up throughout the session. But until then…
Lock and load!
Sincerely,
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