Portfolio Update

Monday was a mediocre day in the market. There were some moves made in the Automotive Parts, Basic Materials, Oil & Gas, and Transports, as well as the Mid- and Small-Caps indices. However, the general averages barely moved at all. In my portfolio the following occurred.

CPLP made the bold bull move I had been expecting of it since I took a position in it two weeks ago. With a gain of 47 cents and better than average volume it broke through resistance and challenged the 200-day moving average. At the close of the day it maintained a gain of almost 6%. The MACD indicator has broken above it's zero line, and the Stochastic indicator has broken into my overbought range of 75+. It is my opinion that it will do something similar to what it did back in late September and October where it eventually ran up to $10.49 per share and then pulled back. I don't believe it will pull back as much as it did in November, but that is any one's guess at this point. I am currently trying to sell the $10DEC09 Call against my stock before expiration this Friday. However, I don't think it will happen as the premium I am asking for is probably higher than the market will bare. I actually do want to keep this stock as the dividend is very good.

EVEP mad fractional gains today on better than average volume. With the MACD and Stochastic indicators being in or near overbought most of last week, the rate of change has peaked and is currently declining. This suggests that the rally is coming to an end, although there may be a couple micro rallies until it pulls back. My guess is that the pull back will be to about $26.20.

FPL jumped and then pulled back on slightly greater than average volume. Considering that it has been on an ever steepening incline and the MACD and Stochastic indicators have been in the overbought range for a couple of weeks, not to mention I was holding a considerable profit on it, I had been setting stops on it for a few days in expectation of this pull back. And as a result of my stop, I have been stopped out with the vast majority of my gains. Finally, an option play that has paid off. Still not going to be doing Naked Calls until I get better with my paper trades of them. But I will mention later one or two that are on my mind.

MU made even more gains, but on less than average volume. At the close of the market, MU is challenging the resistance level made back in October. With the MACD and Stochastic indicators in the overbought range and 4 days until Option expiration, this could be the point of no return for my Covered Call. Considering what happened at this same point back in October, there is the small possibility that my stock won't be assigned to the buyer of my option. However, I don't really care as I am not interested in long-term holds of non-dividend paying stocks. If it doesn't get assigned I will just sell another Call against this stock.

SLV had a bull day, but on less than average volume. In addition, with the MACD and Stochastic indicators in the oversold area and the MACD already turning, I am inclined to believe that the price movement of the near future will be a shallow turn. After the turn completes, I am suspecting a rally to about $21.80 per share. Since I have under 100 shares in the ETF, I can't sell any options against it. I would like to sell a Naked Put as I want more of SLV so I can sell Calls against it, but currently my brokerage account won't let me, and I don't have enough capital in it to be able to cover such an option play or buy more stock straight up.

Earlier in my update about FPL I mentioned that I had one or two option plays I would like to make. Because I don't have personal confidence in my ability to make them work out right now, I am going to mention them for the purpose of paper trading them.

JPM is the first stock that is on my mind for a Naked Call play. It has pulled back about 40% from it's most recent peak and has been bouncing off that level for a little over a month. Before it's most recent rally, it did the same thing back in May through July. Following that it ran up $15. The situation now is that it made a move up of almost 2% on just slightly greater than average volume. The price movement has been consolidating for the past 60 days and the MACD and Stochastic indicators are both in the oversold area and have turned up. All that considered leads me to believe that if it can break above the current downward trending resistance line, which is intersecting with it's 20-day moving average, there is a good chance for it to challenge it's 50-day moving average which is currently at the same level as the previous peak of the downward trend. If both of those occur I am inclined to believe that there is a good chance for JPM to rally to $52. I will make a paper trade on it if it breaks the current resistance level I mentioned.

PDLI is the second stock that is on my mind for a Naked Call play. It has pulled back enormously in the past two weeks and is trying to rally back. Currently it is under a trend line that formed about 30 days ago. The MACD and Stochastic indicators show that the stock is way oversold and suggests that it is fighting to break out. If it actually does break above the earlier formed trend line, then I believe it will rally to the next one shortly afterwards. That rally will be less than a dollar in value, but I believe that it will most likely break through the newer trend line with little hesitation. But that second trend line is the true test. After that there is a good $1.50 range before anymore resistance. With a value of $7 dollars, it would also make for a fare Covered Call play, as well. Just one big problem with the stock in my mind, it is a pharmaceutical. The release of one report, good or bad, will cause the stock to gap in either direction. Recently, it was a gap down of over $1. I will make a paper trade on it if it breaks the current resistance level I mentioned. I am only paper trading it for practice. Typically, I don't believe I would ever trade get involved in it.

As for my current paper trades, both the underlying stock for PCS and S closed lower. However, my PCS Call option registered a small gain for reasons I can only speculate on. For PCS the MACD and Stochastic indicators are in the overbought range and leveling off, suggesting that their isn't much rally to be had. There will probably be a pull back but I can't identify the intensity as the oscillations in the indicators are conflicting. For S the MACD and Stochastic indicators, continue to decline as the price movement resists declining on lower than average volume. This could be a good indication that the pull back will only be marginal and then the rally will break through resistance. A couple more days of this shallow price movement will help to verify this prognostication.

That is my opinion, you can take it or leave it.

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