Weekly Update: January 20, 2016

| January 20, 2016

Weekly Update: January 20, 2016


Big Picture Outlook:

No doubt about it, today was another wild one for the markets…

As you likely heard, the Dow Jones Industrial Average plunged as much as 566 points intraday before buyers stepped in to halt the decline.  After it was all said and done, the Dow ended the day down 249 points, or 1.5%.

Not only did equities plunge, but most commodities skidded lower as well…

WTI crude plummeted into the $26 a barrel range with a loss of $1.91 per barrel (-6.7%) on the day.  What’s more, cocoa, coffee, and sugar all suffered declines of at least 3%.

The only commodities showing solid strength in today’s volatility was gold and natural gas with gains of 1.2% and 2.1% respectively.  Natural gas is likely seeing a bid due to the massive winter storm bearing down on the East Coast.

On the other hand, gold is seeing buying interest due to the intense economic uncertainty we’re seeing in early 2016.

Let’s get to our open positions…


Portfolio Highlights:

Just a quick note: I won’t update every open position every update.  I focus on the positions with significant news or price movement. 

. . . . Southern Company $SO February 19, 2016 $47 calls

$SO rallied to our first profit target at $48.00 yesterday!  The solid upturn sent our $47 calls up to $1.40 a contract, which is a 42% gain from our entry at $0.98.

With the first target hit, conservative investors should have booked most, if not all, of their profits in this trade.  If you’re aggressive, keep holding some of these calls for our second target at $50.00!

. . . . SPDR Gold Trust $GLD March 18, 2016 $106 calls

With uncertainty mounting as equities succumb to intense volatility, gold is seeing some safe haven buying.  In fact, the yellow metal rallied $11 an ounce in today’s session to close at $1,101.

Here’s the deal…

If gold can rally past $1,113, which is the high set on January 8th, there’s a very good chance of additional gains to the next area of resistance at the $1,140 area.

We have plenty of time in these calls so let’s keep holding for higher prices in $GLD.  Keep in mind, our first profit target is at $110 while our second target is at $114.

. . . . iShares Silver Trust $SLV April 15, 2016 $13.50 calls

While silver has seen a few solid intraday rallies over the past week, the metal is still stuck in the choppy sideways pattern at $14 an ounce.  Technical resistance for silver sits at the $14.30 area, so keep a watchful eye on that area.

Remember, our profit targets in $SLV are at $15.00 and $16.50, while our risk control line is at $12.90.


Category: Commodity Trading