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Archive for July, 2009

Halftime Hits

Friday, July 31st, 2009

12:10pm (EST)

The Dow is on track for its best month in decades and the S&P 500 and Nasdaq are back at last October’s highs. We still have a couple of hours of trading left in the day but it’s time to start looking towards next week.

The bulk of earnings hit the market this week and will start to taper off from here on out. I’ve mentioned the bulls will be looking for the “next” catalyst to take us higher and maybe they have already found one. The talking heads were calling for a pullback and were preparing for a pullback before yesterday’s huge rally.

Now, there will be a pullback or drops here and there but keep the technicals and fundamentals in focus. We have come a long way from the March lows and just like the sell-off was overblown this rally could have legs that run too far to the upside as well. The point is there will be jostling between the bulls and bears but the back half of the year is looking pretty bullish.

Near term we can continue to enjoy the rally and there is more money on the sidelines than Wall Street thinks. Things are improving but unemployment is at double-digits and we still have to be careful of the land mines out there. We are taking quick profits and our trading strategies are tight. We are banking 100% gains and moving on to other trades.

This is still a trader’s market and nobody knows where the market will be at next Friday or next month. All we can do is make educated guesses and play what we are seeing. I’ll be back Sunday night with an update unless I’m late getting back in town. I try to do the Weekly Wrap every Sunday but I may skip this week. If so, I’ll see you Monday morning.

Ford (F, $7.91, up $0.52) continues to push $8 and is looking golden to hit $10 by year-end if not sooner.

Rick@MomentumOptionsTrading.com

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Market Opens Higher

Friday, July 31st, 2009

10:15am (EST)

I wanted to see how we opened this morning before posting so I could get a feel for how things may play out today. The Dow is currently up 13 points to 9,167. The bulls will be taking aim on S&P 500 1,000 and right now the index stands at 991, up 5. Nasdaq 2,000 is the other target for the bulls and at 1,995 they have pushed it up 10 points this morning.

A close above these levels will be another clear victory for the bulls.

Ford (F, $7.61, up $0.22) continues to shine and I wish I would have added some August 7 calls (FHJ, $0.77, up $0.19) to the portfolio this week. Ford closed last Friday at $6.78 and had a big Monday. We are in the December 6 calls (FLI, $2.00, up $0.15) and the December 7 calls (FLJ, $1.38, up $0.17) which have done well so we can’t complain.

Bank of America (BAC, $14.31, up $0.34) is back above $14 and has made higher highs all week. Nice. The August 15 calls (BYOHO, $0.32, up $0.07) have traded over 15,000 contracts thus far and they would have been a sweet play this week as well. We have already established positions back in June but watch these call options today and next week. If BAC can break $15 by early next week they are a double.

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Trade Updates

Thursday, July 30th, 2009

11:15pm (EST)

Ford (F, $7.39, up $0.27)

December 6 calls (FLI, $1.85, up $0.20)

Entry Price: $1.25 (5/18/09)
Exit Price: $2.50
Return: 48%
Stop: $1.45

December 7 calls (FLJ, $1.20, up $0.13)

Entry Price: $1.00 (5/18/09)
Exit Price: $1.50-$2.00
Return: 20%
Stop: 75 cents, raise to $1.00

Action: Another new 52-week high for Ford. Nothing else I can add here.

Cisco Systems (CSCO, $21.98, up $0.26)

October 20 calls (CYQJD, $2.55, up $0.10)

Entry Price: $1.50 (6/2/09)
Exit Price: $3.00
Return: 70%
Stop: $2.00

Action: The stock hit a high of $22.40 and the call options traded as high as $2.92 which was a stone’s throw away from our exit target. Tech remains strong and we’ve been in this trade for 2 months now. It is starting to pay dividends and it wouldn’t have been a bad idea to close half the trade up at those levels. That makes it a risk-free trade from here on out.

Bank of America (BAC, $13.97, up $0.45)

November 15 calls (BYOKO, $1.26, up $0.11)

Entry Price: $1.50 (6/12/09)
Exit Price: $2.25
Return: -17%
Stop: If the stock falls below $11, close the position.

Action: Shares broke $14 today and you gotta love the action in BofA this week.

IBM (IBM, $117.86, up $0.60)

August 105 calls (IBMHA, $13.00, up $1.20)

Entry Price: $3.40 (7/14/09)
Exit Price: $12.00 (7/24/09 1/2 the trade was closed)
Return: 253%
Stop: $11.00, raise to $12

August 115 calls (IBMHC, $4.00, up $0.50)

Entry Price: $1.05 (7/16/09)
Exit Price: $2.00 (7/24/09 1/2 the trade was closed, other half sold at $3.25 yesterday)
Return: 245% together
Stop: CLOSED

Action: We were taken out of the 115’s on Wednesday and we have raised the stop on the 105’s call options. Yeah, the 115’s traded as high as $5.13…

Cerner (CERN, $65.57, up $0.44)

August 70 calls (CQNHN, $0.75, down $0.60)

Entry Price: $1.30 (7/27/09)
Exit Price: $2.20
Return: -42%
Stop: Lifted

Action: The calls opened at 25 cents and I said to “play the rebound” meaning we knew the stop was going to get hit and we knew this was an earnings trade. The options have another 3 weeks before they expire.

Microsoft (MSFT, $23.81, up $0.01)

August 23 calls (MSQHQ, $1.07, down $0.06)

Entry Price: $0.78 (7/27/09)
Exit Price: $1.60
Return: 99%
Stop: CLOSED

Action: I’ve been talking all week about this being a “short-term” trade and how we were going to be out by Friday. The exit price was $1.60 and the calls hit a high of $1.59. If you will notice this was a penny shy of $1.60. Now, if you didn’t close the trade then you were greedy. It is important to remember that once an exit target is reached you follow your game plan. I probably should have listed an exit target of $1.56 which is exactly a 100% return but I rounded up.

Visa (V, $67.21, up $0.23)

August 70 calls (VEHHN, $0.85, down $0.30)

Entry Price: $1.60 (7/27/09)
Exit Price: $3.20
Return: -47%
Stop: Lifted

Action: This was the other earnings trade we left open. The calls traded as high as $2.00 today as Visa tried to clear $70 but they faded along with the stock the rest of the day. This was a profitable trade when the calls traded above $1.60. I’ll keep it on the books since I didn’t provide an update at 1:00 pm on the trade but the 80 cent stop was lifted.

Like I said, I don’t do a lot of earnings trades but I couldn’t resist the charts on Visa and Cerner.

Rick@MomentumOptionsTrading.com

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The Bulls Are Back In Town

Thursday, July 30th, 2009

1:45pm (EST)
 
Sometimes the writing is on the wall.  Make that…sometimes the writing is on the Blog.
 
For those of you who have signed on this week, I do a Weekly Wrap on Sunday nights and in the 7/19 issue, I had this to say:
 
“With the Dow at 8,734 and the S&P 500 at 940, I’d say the bulls are going to do something special or we will fall back into a trading range once again. That wouldn’t be so bad but it would set-up a bigger stage for a more explosive move either up or down. However, given the momentum, it appears the bulls are in firm control and willing to push us to new highs. Dow 9,000? S&P 1000? Nasdaq 2,000? Those are the targets on the scope and we have enough meaningful earnings this week to make a run at those levels.” (END) 
 
As we have seen all week, the bulls have held Dow 9,000 and today they are making another push back to last October’s highs.  The Dow is currently up 166 points to 9236, a 1.8% jump.  The bigger stories are the Nasdaq which is up 28 to 1996 while the S &P 500 is up 18 to 993.
 
It has been tough to continue to be a bull when we have been on the right side of the market since early March.  The point I want to make is that sometimes you have to block out what the talking heads are saying and trade what the market is giving you or what you are seeing.  Although I’m not a bull or a bear, I do go with the trend…
 
Everybody has been calling for a pullback and when that happens the market usually does the opposite.  Which is why you have to keep notes on what you are seeing and trade the trend. 
 
What we are seeing with earnings is that companies are beating expectations but missing on revenue.  That is what happened to a couple of our positions last night.  However, we picked two of the strongest stocks within in those sectors and with the market rebounding they are rocking.  We have a ton of winning trades going on right now and I just want to enjoy the moment.  I’ll have a complete wrap tonight by 11pm. 
 
Sorry about the late posts today…
 
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Futures Point Towards Strong Open

Thursday, July 30th, 2009

9:15am (EST)

I’m running a little behind this morning so I’m doing today’s Blog on the fly.

Dow futures are up 70, or 0.7%, at 9,113.  S&P 500 futures are up 10, or 0.9%, at 983 while Nasdaq futures are up 16, or 1%, at 1,617.  We could see a big “pop” at the open as the unemployment data came in better-than-expected. 

Visa (V, $66.78) has done a 360 and is up 60 cent in pre-market trading after falling in after-hours last night.

Microsoft (MSFT, $23.80) was up 43 cents before the open and the August 23 calls (MSQHQ, $1.35, up $0.22) just opened (9:35am). 

I’ll be back shortly with an update on a few other positions.  It’s been a busy morning so please bare with me.

Rick@MomentumOptionsTrading.com

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