TEN Exclusive: Options Update – 3/3/10
Wednesday, March 3rd, 2010Written by Dan Micovic
The market has come to a bit of a standstill ahead of Friday’s all-important jobs report. The SPX seems to be pinned at 1120 and we expect tomorrow to be very similar to today in regards to market action.
This rally has been a good one but now we appear to be a bit overbought all across the board. This rally has been broad-based, which is a positive, but we may have to take a step back before we can take another one forward. The lack of volume in the past week is an indicator that the bulls are running out of steam. The indicators are mostly positive but clearly overbought.
We are bullish but we are on the lookout for sharp, short-lived sell-offs before the rally resumes in earnest.
Weekly Economic Calendar:
Thursday
- Weekly initial jobless claims, the fourth-quarter productivity report, January’s factory orders, and January’s pending home sales report will all be released. Del Monte Foods Company (DLM), Fuel Systems Solutions Inc. (FSYS), Suntech Power Holdings Co. Ltd. (STP), Urban Outfitters Inc. (URBN), Wendy’s Arby’s Group Inc. (WEN), and Marvell Technology Group Ltd. (MRVL) are scheduled to report earnings.
Friday
- February’s unemployment rate, nonfarm payrolls, hourly earnings, and the January consumer credit report will be released. Aircastle Limited (AYR), Assisted Living Concepts Inc. (ALC), and Solarfun Power Holdings Co. Ltd. (SOLF) are releasing their earnings reports on Friday.
New Trade Idea:
There will be no new trade tonight because of the pending jobs report due out this Friday. Volatility should really pick up into the report and after it. It’s really a coin-flip and there is no edge in opening new positions ahead of it.
Open Positions:
Rackspace (RAX) March 20 Calls (RAX100320C20) @ $1.05:
The calls triggered our stop on Tuesday.
Ambercrombie & Fitch (ANF) March 35 Calls (ANF100320C35) @ $1.65:
The stock is beginning to heat up here and we should see a move above $37 shortly. Continue to hold and look to take profits on the calls around $3.00. This is shaping up to be a great trade.
PNC Financial (PNC) March 55 Calls @ .95 or better:
We really like the way the financials have perked up and and we think with some decent economic news, this stock should really prosper. Use 1.75 as a target and use a mental stop of .50. Continue to hold.
Morgan Stanley (MS) March 28 Calls @ 1.00 or better:
The stock has had some difficulty with the 50-day moving average but we expect to see it surge through that level as volume increases. We could see $29-$30 on the stock very quickly. Use $2.20 as a target and .55 as a mental stop-loss.
