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Archive for September, 2009

MomentumOptionsTrading Mid-Day Update For 9/28/09

Monday, September 28th, 2009

12:30 pm (EST)

The bulls are in charge today as they have taken a number of positive developments to move the market higher.  Mergers and acquisitions are the rave today as Abbott (ABT, $49.00, up $1.67) announced that it will acquire Solvay’s pharmaceuticals business for $6.6 billion ($4.5 billion euro) in cash.

Xerox (XRX, $7.41, down $1.56) has made a pitch for Affiliated Computer Services (ACS, $53.35, up $6.10).  It is a cash and stock deal valued at $63.00 per share or $6.4 billion as of the closing price of Xerox’s stock price from last Friday.  ACS shareholders will receive a total of $18.60 per share in cash plus nearly 5 Xerox shares for each ACS share they own.

There were plenty of upgrades today that have also given the market a lift.  Barclays upgraded Cisco (CSCO, $23.83, up $1.21) from “Equal Weight” to “Overweight” and raised its price target from $24 to $28.

ViroPharma (VPHM, $9.75, up $0.80) got an upgrade from “Perform” to “Outperform” and a new price target of $13.

Accenture (ACN, $37.79, up $1.67) is up 5% after it got upgraded from “Hold” to “Buy” with a $45 price target.
General Dynamics (GD, $64.42, up $1.43) was raised from “Hold” to “Buy”, as well, with a target of $78.

And finally, U.S. Steel (X, $47.09, up $0.46) has turned positive after spending much of the morning in the red.  Current subscribers can check the Members Area for the latest option trade for U.S Steel.

Rick@MomentumOptionsTrading.com

New Trade: United States Steel

Monday, September 28th, 2009

11:10am (EST)

Subscribers, check the Members Area for a new trade in United States Steel (X, $46.00, down $0.63).  You should have gotten an email alert from us at 11am…

Rick@MomentumOptionsTrading.com

Futures Higher Ahead of the Bell

Monday, September 28th, 2009

9:10am (EST)

Futures are pointing towards a slightly higher open this morning.  Ahead of the bell, Dow futures are up 45 points to 9,664. The S&P 500 futures are higher by 6 points to 1,047, while the Nasdaq 100 futures are up 9 to 1,706.

In earnings news, Cal-Maine Foods (CALM, $27.78) reported a quarterly loss of $0.16, versus Wall Street’s estimate of $0.26.  Revenue came in at $188 million, which compares to estimates of $207 million.  This is one of the things we are watching for during the upcoming earnings season – revenue growth.

I mentioned last night that companies were easily able to beat 2Q earnings with aggressive cost-cutting but Wall Street will be looking for more growth this time around.

Overseas markets were weak this morning so I don’t expect the higher open to last as volume is expected to be light today.

Rick@MomentumOptionsTrading.com

Weekly Wrap for 9/27/09

Sunday, September 27th, 2009

11:40 pm (EST)

Market Commentary

The bears finally made some noise last week as they sent the market down 2%, on average.  The bulls were making a run at Dow 10,000 and by Wednesday the index rallied to a high of 9,937 shortly after the Fed news. That is exactly when the bears stepped-in and made some noise.  It remains to be seen if this is their entry point or just another whimper before the bulls power higher.

For the week the Dow dipped 155 points, or 1.6%, to finish at 9,665.  The Nasdaq fell 42 points, or 2%, and ended at 2,090 while S&P 500 skidded 24, or 2.2%, and settled at 1,044.  We had some crummy economic news that weighed on the market; a disappointing Durable Goods Report and a lousy Home Sales report.

September was supposed to be a down month if you were listening to the talking heads but I had mentioned that you have to trade the tape.  Yeap, the rally has fooled a lot of investors since March and the bears may finally be gathering some confidence as we head into earnings season. 

We will have to wait for the next leg to develop which should be this week.  The market has traded much like we had planned and on August 23rd, I had this to say:

“The market has had an incredible run and the key levels we are watching are as follows.                                                                     

For the Dow (currently 9,505), watch for 9,625 which was the November high.  A run above this level clears the way for…dare I say it….Dow 10,000.  There is support at 9,000 but a break below 8,900 would send up a warning signal.

As for the Nasdaq (2020), it looks like 2,100 is smooth sailing as long as the bulls continue to run this week.  Above that, we get choppy but we could get a run to 2,275.  Support is at 1,930 and further down at 1,800 or so.  A break below that could lead to 1,600.

The S&P 500 (1,026) could easily make a stab at 1,100 now that it has surged past 1,000 but 979 will be key support near-term.  There is really nothing stopping the index from hitting 1,150-1,175 which is where headwinds will pick up.” (END)

Last week, the Dow tagged 9,937, the Nasdaq traded to a high at 2,067 while the S&P hit 1,080.  That was the road map we drew up in August and now we have to wait for the “shakeout”.  

I mentioned on Friday that Alcoa (AA, $13.08, down $0.43) would kick off earnings season on October 7th.  The key for 3Q earnings will be the revenue numbers.  Most companies beat 2Q earnings by aggressive cost cutting but revenues were coming in a little lighter than expected.

I don’t think that will pass this go around.

There are a slew of economic reports due out this week which will influence the market and we have a few earnings reports that should provide some insight ahead of 3Q earnings.  

We will also get an update on home prices, manufacturing, consumer confidence, construction spending, and factory orders.  The big one though will be Friday’s unemployment report. 

Both bulls and bears will be jockeying for position ahead of next week’s launch of 3Q earnings.  The bulls are loaded with cash and there is even more on the sidelines while the bears will target unemployment and the lack of revenue growth. 

Earnings (quotes are from Friday’s close):

Monday:  Cal-Maine Foods (CALM, $27.78, up $0.10), Craftmade International (CRFT, $3.28, down $0.17) and TRC Companies (TRR, $3.80, up $0.01). 

Tuesday:  Allscripts-Misys Healthcare Solutions (MDRX, $18.35, down $0.22), Darden Restaurants (DRI, $35.60, up $0.16), Jabil Circuit (JBL, $11.87, down $0.66), Micron Technology (MU, $8.10, down $0.01), Nike (NKE, $58.64, up $0.47) and Walgreen (WAG, $33.68, up $0.03).

Wednesday:  Actuant (ATU, $15.60, up $0.08), Diamond Foods (DMND, $29.40, flat) and Lawson Software (LWSN, $6.35, down $0.05),

Thursday:  Accenture (ACN, $36.12, up $0.16), Constellation Brands (STZ, $15.30, down $0.17), CRA International (CRAI, $27.62, up $0.41), Global Payments (GPN, $44.76, down $0.70), Immucor (BLUD, $17.26, down $0.16) and Resources Global Professionals (RECN, $17.31, up $0.52).

Friday:  None worth mentioning.

Subscribers, please check the Current Trades in the Members Area for the updates.  They are listed under Monday, September 28, 2009.

 

Rick@MomentumOptionsTrading.com

Market Lower Heading Into The Weekend

Friday, September 25th, 2009

1:00pm (EST)

The market is struggling for direction as we head towards the closing bell.  Unless we get a major turnaround, it looks as though the bears are going to take this week’s round.  The Dow started the week at 9,820 and is down about 170 points, including today’s current 52 point loss which puts us at 9,654.

There were a number IPO’s (Initial Public Offerings) yesterday and quite a few secondary offerings.  This week’s IPOs have been the most since 2007, and today, Shanda Games (GAME, $11.93, down $0.57) got initiated on the Nasdaq.

The other IPO’s that went public this week include: A123 Systems (AONE, $19.00, down $1.29), Artio Global Investors (ART, $26.69, down $0.56), Alexandria Real Estate Equities (ARE, $54.00, up $0.71), and Colony Financial (CLNY, $19.39, down $0.11).

Earnings season is right around the corner so next week could be volatile as traders position themselves ahead of the announcements.  Alcoa (AA, $13.10, down $0.41) will kick things off starting October 7th so mark your calendars.

I’ll be back Sunday night or Monday morning with the playbook for next week.  There are no updates or new trades in the Members Area this afternoon but our latest option trade in Moody’s (MCO, $19.44, down $0.44), which we opened yesterday, is off to a good start.

Rick@MomentumOptionsTrading.com

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Trader Comments:

    REGINA L.
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    SCOTT H.
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    PETER G.
    Rick & Team, GREAT Call on NKE for my two trading accounts:
    1) Entry at .65, out at 1.45, 1.55 Profit = $415
    2) Entry at .60, out at 1.75, 1.50 Profit = $485

    LAWRENCE O.
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    1) Great call on the JoyG March 55. I bought when you said, then bought again on one of the dips. Booked 80+% profit. Made enough to pay for your service for years to come.

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    I see that you took a loss on some of these. It’s all good. I look to trade your “ideas” not your exact calls. I THANK YOU! For your ideas and commentary. Keep up the good work. And keep those ideas coming.

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    Loving this subscription so far! I got into the BRK feb 76 calls the day you talked about right before the split...now up over 300% (0.70 to 2.475)! Keep the good picks coming and let's see some OSIS and EMC upside soon! Just wanted to share my positive enthusiasm on your newsletter...it gives us individual investors great ideas on not only the options market, but also the broader equity market! Case in point is BRK...I can't always read the breaking business news but its easy to read your twice daily updates on my smartphone...helped me get some BRK shares immediately after the split which I will hold for the long haul! Thanks again!

    SHAUN
    Aloha Rick - Thank you so much for the great CL pick. I am not sure if there was buy-out/merger news or what but at 3PM today Colgate-Palmolive absolutely EXPLODED to the upside, and my calls turned into green candy when they went from 1.40 to 3.8 in a matter of seconds! I even sold a few for over 4.0! Much thanks and keep the solid picks up my friend, honestly. Only a fool would scoff at 267% gains... Peace!

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    Hi, good morning. I jumped the gun a little on this one (PCLN). But still made $1,675.00 profit!! Very happy!! Keep up the good work!! Thanks.

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    NOEL
    I got into the Nike 60 Call at 1.85, sold at 5.00, also bought a 55 put at 1.05, but got stopped out at .35. What a ride! $2830.00 in the black even with the put. It's right at 100% return. I hope earnings season coming up is going to look like this trade.

    TODD F.
    Nice call on Nike. I think I'll go buy a pair with my profits! : ) I did the straddle for safety but still made 62% on the trade. Not bad for less than 24 hours. If Goldman is right, then the Nov 70s or 75's could be a steal today.

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    What a sweet way to get introduced to Momentum. My first trade based on your picks and it a 2X. Thank you!

    NOEL
    “Limit order was set at 1.60 on RIMM so it sold. I may have left some money on the table but you can't go broke making a profit. That was a fun trade. Thank you. Good call. I’ve been watching and trading Rick's advice since March. It’s usually a fun ride, but I give him heck when it's wrong to. :) ”

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    GREG
    “Rick – Wow what a day! I got in at the Dendreon calls at $2.25. Thanks to for your advice. I appreciate that. This company has a lock on this type of therapy and no one else in the world is close. Kind of reminds me of the type of companies that Peter Lynch and Warren Buffet suggest that investments be made in. Companies that can build a moat around their business model, that allows them to charge a premium for their product or service. In other words - a monopoly.”

    KEN
    “Hi Rick, Thank you so much for the Dendreon trade, I made almost $10,000 with that trade with a little over $2,000 investment. You have shown me the power of options trading. Again, thank you so much for all your inputs.”

    GARETT
    “Hi Rick, thanks for the encouragement to play the dendreon calls! did freaking great! Got in the first lot at $1.44 on 3-24-09, sold at $2.45, 70% not bad. Bought it back at $2.30 on 4-7-09 closed out on 4-14-09 for 454% gain! Wow! I love it when that happens. So, thanks the encouragement to get back in when others were saying sell, sell, sell. Keep up the good work.”

    TERENCE
    “Rick – Thanks for Dendreon – it has made all the headlines today! I missed on RIMM earlier, but I’ve been holding onto DNDN calls since 3rd week March. Of course today it all paid off today, as DNDN rocketed up.”

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