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Thursday, October 22nd, 2009
1:00pm (EST)
The Dow is struggling to hold the 10,000 level but the bulls have been trying. Futures were pointing towards a strong open this morning BEFORE the Initial Jobless Claims report came out at 8:30am (EST). Once the news was released futures slipped after the report showed a rise for the week as claims came in at 531,000, versus expectations of 515,000 and compared to 514,000 last week.
Currently the Dow is up 52 points to 10,001 and the S&P 500 is up 1 tick to 1,081. The Nasdaq is lower by 7 points and is at 2,143.
The dollar is higher which has pushed commodity prices lower, and is weighing on Energy and Materials stocks. There are a few bright spots however. 3M (MMM, $78.52, up $2.19), AT&T (T, $26.41, up $0.47), McDonald’s (MCD, $59.56, up $1.23) and Travelers (TRV, $50.72, up $2.71) are all higher after reporting better-than-expected earnings.
McDonald’s reported earnings of $1.15 a share, which was 4 cents higher than the Street’s estimate of $1.11, although revenue for the quarter came in just below estimates of $6.1 billion at $6.05 billion. The stock is rallying today but its CEO did say the “declining informal eating out market around the world” could hurt October sales and that they would be “flat to slightly negative”.
We will get some fireworks after the close in the Financial sector today as American Express (AXP, $35.13, up $0.03) and Capital One Financial (COF, $37.50, up $0.87) report earnings after the bell. If we get some good news that consumers are repaying loans then we could rally. If both companies are struggling to collect debt, that could help the bears case. Microsoft (MSFT, $26.40, down $0.18) reports on Friday…
As usual, we will be back in the morning with an update on the market and our Current Trades. If you are not yet a subscriber, you can join anytime today and by tomorrow morning by 8am (EST) to get Friday’s update. The market could be setting up for a big move over the next few weeks and we will be here twice a day bringing you the updates.
Tags: momentum options, MomentumOptionsTrading.com, options help, options mentoring, options track record, options trading, trading options
Posted in Company Commentary, Earnings, Hot Stocks, Market Analysis, Market Commentary | Comments Off
Thursday, October 22nd, 2009
9:15am (EST)
The big news after the bell yesterday was eBay’s (EBAY, $25.03) disappointing outlook for the holiday season. The company reported 3Q earnings and offered an outlook for 4Q at the same time. On the earnings front, eBay beat by a penny and posted better-than-expected revenue. The problem was that their forecast for the upcoming quarter was below expectations.
The company earned $0.38 a share, a penny above Wall Street’s forecast, and revenue came in at $2.2 billion. The Street was expecting $2.14 billion. PayPal and Skype, two of eBay’s top performers, helped drive those earnings numbers. All good here.
For the fourth quarter, eBay said it now sees earnings of $0.38-$0.40 a share. Wall Street had been expecting 40. eBay spooked analysts when it said revenues are expected to be between $2.2 billion and $2.3 billion. Wall Street was thinking north of $2.5 billion. Yikes.
The suit and ties are already bored with 3Q earnings and seem focused on what the holiday is shaping up to be like. That shouldn’t be a surprise because the market always looks ahead but the bulls have got to be frustrated that we haven’t got the huge triple-digits pops like we got when the market was correcting. Not 100-point swings, but 500 and 600 point swings.
Perhaps the bulls are taking the market higher in orderly fashion (our opinion) and the higher trend that has been in place since March continues just like it has. Sure, there has been some volatility but it has been nothing compared to what we went through last year at this time.
We talked about our upside targets for the major indexes earlier in the week but it is important we keep an eye on the selling pressure we saw in the final hour of trading on Wednesday. We will have to see if yesterday’s reaction was due to the negative Beige Book numbers we got at 2pm or if the bears are rallying the troops.
We mentioned that we are watching the 1,100 level for the S&P 500 which was hit once again but the index closed at 1,081, down 10 points. The Dow closed below 10,000 as it fell 92 points and settled at 9,949. We would like to see 9,900 hold as this level was tested yesterday and represents short-term support.
Despite the rough market conditions you still have to manage your trades and adapt to the elements. This could mean tighter stops or quicker exits and we talk about these things more in-depth this morning in the Members Area.
Tags: momentum options, MomentumOptionsTrading.com, options help, options mentoring, options track record, options trading, trading options
Posted in Hot Stocks | Comments Off
Wednesday, October 21st, 2009
12:30pm (EST)
In August, we listed a group of IPO’s that were coming out and in September and many of them have made their debut. From September 25th (quotes are from that day):
“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) and Colony Financial (CLNY, $19.39, down $0.11).” (END)
Well, out of the group, A123 Systems (AONE, $24.63, up $0.11, current price) is the one we want to start watching…like a hawk. Its 52-week high is $28.20.
A few things we like to see is volume and volatility and this stock has both. The average daily volume is over 5 million shares and the option pits are pretty liquid.
The company makes lithium-ion batteries and had high hopes over a year ago as they thought they were closing in on a Chevy Volt contract but eventually lost out. However, they signed a deal to supply Chrysler with batteries for its cars. And the market for these types of batteries is HUGE.
Besides cars, think smartphones and other products…every iPod, iPhone and Apple laptop has a lithium-ion battery. The “new” battery is smaller, more energy efficient, longer lasting, and are effectively replacing the previous generation of nickel metal hydride batteries.
Of course, there is competition in the space but with other car manufacturers joining the race for electric cars, and the transition over to these batteries have dramatically improved the potential market. However, many other would-be competitors have not even begun mass production yet which will play into A123’s hand once demand starts to peak.
A123 will likely play a big role for temporary energy storage for utilities and they were recently awarded a $250 million grant from the Department of Energy to build a manufacturing plant.
On the negative side, the stock could see some selling pressure once their “lock-up period” is up. Typically, when a company goes public, its insiders can’t sell their shares for a certain period of time which is usually 90 days to a year. If a company is full of smoke-and-mirrors or has some skeletons in its closet, company insiders who know about them can’t act on this “inside” knowledge until after the lock-up period has ended. They will start to sell stock before the public learns of any bad news hoping to get out at the top.
Now, I’m not saying A123 is shady or anything, I’m just explaining how the IPO market works.
A123 appears to be a boom or bust company and from the way it has been trading it has become clear there is action in the stock. The key for us will be to watch for an opportunity to get into some options. We might go long, we might go short, or we might do a straddle or strangle trade. However, we have to wait for our opportunity.
Keep this one on your Watch List and when we see a trade, we will alert our subscribers.
The market is slightly higher at the halfway point. The Dow s up 31 points to 10,072 while the Nasdaq is up 10 to 2,174. The S&P 500 is at 1,096, up 5, and remains within spitting distance of 1,100 which was hit Monday.
As far as our current trades…thumbs up! Imax (IMAX, $11.24, up $0.14) continues to push new 52-week highs and our option trade from August has now reached a double. We still have high hopes for the stock and have a $15 price target on the shares. However, the options we are following will yield another double from current levels if Imax reaches $15 by March 2010.
If you are not a current subscriber, you can quickly become one and get our updates as soon as you signup. Our Members Area is updated every morning with the CURRENT TRADES and are emailed instantly to your email inbox.
Tags: A123 Systems, Artio Global Investors, call options, Colony Financial, IPO option trading, IPOs, option trade picks, options mentoring, options track record, options trading, put options, stock picks
Posted in Company Commentary, Hot Stocks, Market Analysis, Option Trades | Comments Off
Wednesday, October 21st, 2009
9:15am (EST)
Futures are pointing towards a lower opening on Wall Street this morning as 3Q earnings reports once again set the market’s mood. There are quite a few companies that continue to post better-than-expected results but one thing that is worrisome is that the market is not making HUGE moves. One thing we haven’t seen is the big 300 and 400 point moves the Dow is capable of making and earnings have been super.
Our near-term targets remain 2,275 on the Nasdaq and 1,175 for the S&P 500 and 10,400 for the Dow. However, we are getting a little choppy up here and 3Q earnings have been coming in better-than expected. Perhaps the market has already priced in these super earnings but one thing for certain is that we are entering a crucial phase for the market over the next few weeks.
Yahoo (YHOO, $17.17), Morgan Stanley (MS, $32.52) and Wells Fargo (WFC, $30.46) all reported better-than-expected earnings yet futures are pointing towards a lower open? Apple (AAPL, $198.76), Google (GOOG, $551.72) and Intel (INTC, $20.18) reported monster quarters but we are not seeing the sizzle from their solid earnings reports.
As we head to press, Dow futures are lower by 38, to 9,962. S&P 500 500 futures are off by 4 to 1,083, while the Nasdaq 100 futures are off 7, to 1,751. Subscribers can check the Members Area for the current trade updates…
Tags: Google, mentoring stocks, momentum options, momentum plays, Morgan Stanley, option trade picks, options mentoring, options track record, options trading blog, Wells Fargo, Yahoo
Posted in Earnings, Financial Stocks, Market Commentary, Option Trades | Comments Off
Tuesday, October 20th, 2009
1:00pm (EST)
The bears took advantage of a weak housing report today and have crashed the earnings party the bulls were ready to have. The Commerce Department said applications for home building permits, a measure of future construction, fell in September by the largest amount in five months. Not a good sign for the housing industry which has been struggling to recover this year.
We mentioned Apple’s (AAPL, $199.00, up $9.14) earnings this morning and we knew $200 would be the new battle ground for the stock. Shares are now trading at a ”premium” according to some analysts and could fall over the near-term now that all of the hoopla is out. And that could be the case but we tend to shy away from buying Apple put options because it is such a strong company. It looks ripe for a short at these levels but I don’t think I’d sleep easy betting against Apple no matter how high shares have run.
I was sure hoping the company would announce a stock-split but that didn’t happen. A 3-for-1 split would put shares at $67 and make it affordable for the retail investor to purchase the stock again. The smartphone market will get even more intense over the next several quarters but Apple is head and shoulders above the competition. And Mac sales are set to EXPLODE.
Caterpillar (CAT, $59.00, up $1.15) also came in with a great report as the company posted earnings of $0.64 a share, blowing-out Wall Street’s estimate of just $0.06 a share. Shares have traded to a high of $61 and the outperformance was attributed to the foreign exchange, lower tax rates and accounting. Revenues came in at $7.3 billion, versus estimates of $7.5 billion but Caterpillar believes the worst is behind us. Quote…the company’s CEO now sees “encouraging signs that indicate a recovery may be underway.”
Yahoo (YHOO, $16.95, down $0.26) reports after the bell and Wall Street is looking for earnings of $0.07 a share on revenue of $1.1 billion. For the second quarter, Yahoo did 16 cents a share and easily doubled 8 cents the Street was looking for. The November 17 calls (YHQKR, $0.85, down $0.10) have traded over 7,000 contracts compared with 3,500 contracts of the November 17 puts (YHQWR, $0.90, up $0.20). That is a 2-to-1 ratio for the bulls and the action is suggesting an 8%-10% move up or down on Wednesday. We’d love to play this one but we are going to sit on the sidelines.
As we head to press, the Dow is down 87 points to 10,005, the S&P 500 is off by 10 to 1,087 while the Nasdaq is lower by 21 points and is trading at 2,155. We have profiled a new trade today and it is in the retail sector. If you are a current subscriber, please check the Members Area NOW for the 1pm Update.
Tags: Apple, Caterpillar, Momentum stocks, option trade picks, options mentoring, options trade picks, Yahoo
Posted in Company Commentary, Earnings, Market Analysis, Market Commentary, Option Trades | Comments Off
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Market Mixed After Jobless Claims Data
Thursday, October 22nd, 2009
1:00pm (EST)
The Dow is struggling to hold the 10,000 level but the bulls have been trying. Futures were pointing towards a strong open this morning BEFORE the Initial Jobless Claims report came out at 8:30am (EST). Once the news was released futures slipped after the report showed a rise for the week as claims came in at 531,000, versus expectations of 515,000 and compared to 514,000 last week.
Currently the Dow is up 52 points to 10,001 and the S&P 500 is up 1 tick to 1,081. The Nasdaq is lower by 7 points and is at 2,143.
The dollar is higher which has pushed commodity prices lower, and is weighing on Energy and Materials stocks. There are a few bright spots however. 3M (MMM, $78.52, up $2.19), AT&T (T, $26.41, up $0.47), McDonald’s (MCD, $59.56, up $1.23) and Travelers (TRV, $50.72, up $2.71) are all higher after reporting better-than-expected earnings.
McDonald’s reported earnings of $1.15 a share, which was 4 cents higher than the Street’s estimate of $1.11, although revenue for the quarter came in just below estimates of $6.1 billion at $6.05 billion. The stock is rallying today but its CEO did say the “declining informal eating out market around the world” could hurt October sales and that they would be “flat to slightly negative”.
We will get some fireworks after the close in the Financial sector today as American Express (AXP, $35.13, up $0.03) and Capital One Financial (COF, $37.50, up $0.87) report earnings after the bell. If we get some good news that consumers are repaying loans then we could rally. If both companies are struggling to collect debt, that could help the bears case. Microsoft (MSFT, $26.40, down $0.18) reports on Friday…
As usual, we will be back in the morning with an update on the market and our Current Trades. If you are not yet a subscriber, you can join anytime today and by tomorrow morning by 8am (EST) to get Friday’s update. The market could be setting up for a big move over the next few weeks and we will be here twice a day bringing you the updates.
Tags: momentum options, MomentumOptionsTrading.com, options help, options mentoring, options track record, options trading, trading options
Posted in Company Commentary, Earnings, Hot Stocks, Market Analysis, Market Commentary | Comments Off