Tuesday's market activity brought little happiness to investors as the major equity averages plummeted more than 1% on concerns about rising energy costs and the falling value of the dollar. Consumer sentiment also weighed on share values after the Conference Board said its index retreated amid declining optimism about business conditions in the coming months.
Even with the sharp drop in equity values, there was little notable activity in the MCM portfolio. Obviously, the bearish plays are not a serious concern with stocks in a broad-based retreat. However, there are four bullish positions in our portfolio including: Cognizant Technology (NASDAQ:CTSH), Infosys Technologies (NASDAQ:INFY), Phelps Dodge (NYSE:PD) and Take-Two Interactive Software (NASDAQ:TTWO). Among these issues, TTWO appears to be the most critical with the stock currently trading only $1.30 above the sold (put) strike in the MAR-$32.5/$35 spread. Fortunately, there is some technical support afforded by the previous trading-range "top" near $35.50 but with the company's quarterly report due some time in mid-March, the position certainly deserves our attention.
INFY and CTSH have similar chart patterns and as long as the expected lateral consolidations do not threaten the respective strike prices of the sold (short) puts, there should be little maintenance required in those positions. PD is the only real "wildcard" in the group and as we mentioned in the original play description, traders should expect some volatility in the underlying issue.