Weekly Update: September 23, 2015
Weekly Update: September 23, 2015
Big Picture Outlook:
No doubt about it, it has been a challenging few weeks of indecisive trading for both stocks and commodities. Equity markets are stuck in a pattern of big overnight futures moves with little action during the actual trading day.
Meanwhile, commodities seem content with trading in a choppy sideways fashion until investors get a better read on the strength of the global economy.
Speaking of which, much of the last month’s intense market volatility stems from Chinese economic worries. Confirming these worries is the fact China’s September PMI reading just fell to 47, which is the lowest in six years.
Keep in mind, a PMI reading below 50 indicates contraction in China’s massive manufacturing sector.
What can we expect from the markets going forward?
Since we’re smack dab in the middle of two of the worst performing months of the year for stocks, it’s likely we see a few more weeks of choppy, highly indecisive trading.
In times like these, it’s best to be very selective and only take option trades presenting a very solid risk/reward.
Let’s take a look at a few of our open trades…
Portfolio Highlights:
Editor’s Note: I won’t update every open position in every update. I focus on the positions with significant news or price movement.
. . . . Silver Wheaton $SLW October 16, 2015 $13 puts
$SLW is still stuck in a downtrend. The silver streaming company fell to $11 a share on September 14th before getting a small rally to the high $12 area. But with the price of silver sinking back into the mid-$14 an ounce range in recent trading, $SLW is back on the defensive.
Remember, we already collected some nice profits on this trade when $SLW hit our first profit target at $12.
If you’re aggressive, keep holding these October puts for further weakness in $SLW. Our second profit target is at $10.00!
. . . . Goldcorp $GG October 16, 2015 $14 puts
$GG still can’t hold onto any gains. The gold miner is currently trading near 52-week lows at $12.50 a share, which is below our first profit target at $13.
Should $GG break to new 52-week lows in coming days, there’s a very good chance we see the gold miner fall to our second profit target at $11.00.
. . . . US Oil Fund $USO November 20, 2015 $14.50 calls
WTI crude is still stuck in a frustrating sideways trading pattern in the $45 a barrel range. Even though this morning’s EIA inventory report revealed a slight weekly drawdown of 1.9 million barrels, WTI is selling off on the day.
Remember, we already collected a quick 50% profit when $USO hit our first profit target at $16.00 on August 31st.
We still have plenty of time left until expiration in this trade so let’s hang on to these calls a bit longer.
. . . . Whiting Petroleum $WLL and Southwestern Energy $SWN
These two call trades from July never found the bullish push they needed to get profitable. Both trades hit their risk control lines within a few days of initiation and expired worthless last week.
. . . . Franco Nevada Gold $FNV October 16, 2015 $40 puts
Unfortunately, $FNV rallied to our risk control line at $44.15 on September 18th. Conservative investors likely already closed this trade. If you’re aggressive, keep holding your $FNV puts for another downturn.
Until next time,
Justin Bennett
***Editor’s Note*** I’ve recently joined the Twitter revolution! In case you’re unaware, Twitter is a remarkable tool for distributing timely market information. Throughout each trading day, you’ll find me posting commodity related articles and information that will help you get a handle on the markets.
You can follow me by searching for my twitter handle: @CommodityRes
See you in the Twittersphere!
Category: Commodity Trading
