Option Investor
Commentary

Nice Bounce But Now What?

HAVING TROUBLE PRINTING?
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Not a bad week for the watch list with both positions, FNM and APC, filled in just about the best possible way. However, I missed a nice exit on Wednesday when GM shot up to $33.20. It would have been a great place to exit our May insurance call.

The rebound in oil prices helped lift our oil stocks back out of their depression but I seriously doubt we have seen the lows for the quarter. The summer demand has not yet hit inventories and they are still building. Once they start to decline the real fun will begin.

For the coming week we still have a very full portfolio and the airline shorts are not working as planned. With oil holding around $50 there are comments nearly every day that $40 oil will return. This is keeping the airlines on life support along with their new fuel surcharge fees. Both JBLU and CAL are at resistance so we will either be proven right or be stopped out very soon.

I hesitate to add any new positions until I lighten the load. I am trying to maintain the portfolio to a maximum outlay of $10,000 for one contract of every position including the insurance. The addition of FNM and APC this week puts us over that level and for those traders on a budget I would dump the airlines to add these positions.

With the summer doldrums approaching quickly I hesitate to add any new entries to the watch list but there was one I could not resist.
 

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