Locking in 18.22% Option Gains

Nicholas Vardy

Nicholas Vardy has a unique background that has proven his knack for making money in different markets around the world.

Global stock markets continued their relentless rise last week. The Dow Jones was up 0.57%, the S&P 500 rose 0.75% and the NASDAQ jumped 0.92%. The MCSI Emerging Markets Index also joined the party by rising 0.69%.

Big gainers in your Bull Market Alert portfolio included The Bank of Ireland (IRE), which gained 3.93%, and Flextronics International (FLEX), which added 1.94%.

Three positions, the iShares MSCI BRIC ETF (BKF), United Rentals, Inc. (URI) and Trinity Industries (TRN), also hit new 52-week highs.

Flextronics International (FLEX) also moved back above its 50-day moving average and returned to a BUY.

Recall that last Thursday, Aug. 28, I issued a Special Alert to close your stock and related option positions for gains in Mobile Telesystems (MBT), ProShares Ultra Real Estate (URE) and ProShares UltraPro Dow30 (UDOW).

Today, I am recommending that you book 18.22% gains in your December United Rentals, Inc. (URI) $115 call options (URI141220C00115000) as well.

Poor seasonality is why I’ve been recommending that you lighten up on your Bull Market Alert positions over the past few days.

As we enter September, we are on the cusp of one of the most traditionally negative times of the year. Looking back to 1950, September has not been a good month for stocks. It has been up 29 years but down 35 years. The average return on U.S. stocks in September has been -0.64%.

In addition, with the U.S. stock market closing a surprisingly strong August, many of your current positions are technically overbought and are due for a pullback.

That all said, September’s track record has been considerably better in years such as this one when the market is rising. And with market sentiment still firmly in the “fear” camp, there is room for this market to run higher.

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Nevertheless, I think it’s prudent to hold off on a new recommendation this week to see how the markets shake out as traders return from their holidays.

Portfolio Update

The Bank of Ireland (IRE) gained 3.93% last week. IRE spent the last half of August rising to the mighty 200-day moving average (MA) and has hovered around this price level for the past three trading sessions. IRE was last at this level back in mid-May. Although IRE may wobble a bit along this line for the short-term future, a definitive break above could spell a long-term continuing recovery for the strongest bank in Ireland. IRE is a BUY.

Visa Inc. (V) dipped 1.65%. News broke yesterday that Apple plans to include “virtual wallet” functionality in the coming iPhone 6. Visa, MasterCard and American Express are reportedly on-board as well. Reports claim the new iPhone will include near-field communication (NFC) technology, as well a software-based “wallet,” which will store credit card information and/or a dollar balance. Although this technology has been in place for several years on Google-based phones, watchers are hopeful Apple can move the technology forward even more. Visa fell below the 50-day MA to become a HOLD.

United Rentals, Inc. (URI) added 0.35% and managed a new 52-week high earlier in the week. URI announced the opening of eight new specialty branches. These rental outlets specialize in hard-to-find equipment for more unique jobs. Moody’s also upgraded several of URI’s ratings last week, including its Probability of Default Rating (PDR), Corporate Family Rating (CFR) and debt ratings. URI is a BUY.

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Trinity Industries (TRN) rose 0.42% for its first week in your Bull Market Alert portfolio and hit a new 52-week high. This bet on the booming railcar business is up nearly 11% over the last month and a whopping 78% for 2014. Its multi-billion dollar backlog should keep TRN moving higher for quite some time. TRN is a BUY.

Nicholas Vardy

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