11:10pm (EST)
It may have been a short week of trading but the market took investors for a wild ride but ended the week pretty much unchanged. Hard to believe, especially with the Dubai news. Friday was a short day and volume was light which tends to impact directional moves in the market.
The Dow was pressured right from the jump and at one point sank to a low of 10,230 before finishing the day with a 154 point decline. We had factored in a drop to 10,100 but during the panic, the “baby” bulls stepped-in and lifted the market. The Dow had started the week at 10,318 and we ended at 10,309. The fact this level held while Wall Street was on vacation was impressive given the curveball we got.
As far as the S&P 500, we continue to teeter back and forth at the 1,100 level and the index closed at 1,091, down 19 points on Friday but flat for the week. The S&P did trade to a low of 1,083 but the 1,070 level held. As far as the Nasdaq, which shed 38 points on Friday, it closed at 2,138, down 7 for the week. The low was 2,113 and we were looking for 2,100 to hold.
Although we were encouraged with the snapback we got off the lows, it doesn’t mean we trust this market. Wall Street loves to climb the Wall of Worry so anything can happen this week. Once we broke through key resistance levels we knew trading would be choppy until the market searches for its next leg up or down.
When we see this, we usually limit our exposure. When we start getting stopped out of some good trades then we know we are in transition. We still think the market goes higher before year-end but the Dubai news could be worse than what we may know or then again it may be overblown. The good news is that U.S. banks had relatively limited exposure to the problems, according to some Wall Street analysts, so the bulls could blow this news off.
Retailers are reporting that Black Friday sales were decent so it may also lift Wall Street’s mood. It seems like traffic was steady throughout the weekend and up from a year ago. Online purchases are expected to do even better versus last year’s numbers. We will see just how well stores did when retailers release their sales results for November on Thursday.
There is plenty of other economic news we need to watch this week as well. Tomorrow is known as “Cyber Monday” and it is the big “online shopping day” that follows Black Friday. Shortly after the bell we get the Chicago PMI report, which is a read on manufacturing. Wall Street is expecting a print of 53, down from 54.2 in October.
Tuesday, watch for the ISM Manufacturing index news which is expected to fall to 54.8 from 55.7 in October. Construction spending for October is expected to have fallen 0.4% after rising 0.8% in September. We also get the pending home sales for October. The news here could surprise but many are expecting the index to have fallen 0.5% after rising 6.1% in the previous month. And if that weren’t enough, we also get reports on November auto and truck sales.
Wednesday, watch for the Payroll services report from ADP before the bell. Employers in the private sector are expected to have cut 148,000 jobs from their payrolls in November, after cutting 203,000 in the previous month. The Fed will give us an update on the ”beige book” report on the economy in the afternoon.
Thursday, we get the weekly jobless claims report from the Labor Department which is expected to show an increase to 483,000 workers who have filed new claims for unemployment, up from 466,000 the previous week. Also, the ISM service-sector index is expected to have risen to 51.5 from 50.6 in October.
On Friday, all eyes will be on the November employment report. Employers are expected to have cut 114,000 jobs in the month after cutting 190,000 in the previous month. The unemployment rate is expected to hold steady at 10.2%, unchanged from October. We also get a look at October factory orders report is due out after the opening bell. Wall Street is expecting orders to have risen 0.1% after rising 0.9% in September.
As far as companies reporting earnings (quotes are from Friday):
Monday: Inergy Holdings (NRGP, $53.46, up $0.14) and Omnivision Technologies (OVTI, $13.41, down $0.40),
Tuesday: Beacon Roofing Supply (BECN, $15.45, down $0.15), China Nepstar Chain Drugstore (NPD, $7.45, up $0.33) and Staples (SPLS, $23.32, down $0.18).
Wednesday: Aeropostale (ARO, $31.49, down $0.18), Collective Brands (PSS, $20.13, down $0.67), Jo-Ann Stores (JAS, $33.61, down $0.39), Pantry (PTRY, $14.81, down $0.49), Shanda Interactive Entertainment (SNDA, $49.90, down $0.25) and Synopsys (SNPS, $22.43, down $0.16).
Thursday: A-Power Energy Generation Systems (APWR, $17.60, up $1.30), Canadian Imperial Bank of Commerce (CM, $64.78, down $1.27), Del Monte Foods (DLM, $10.63, down $0.13), Diamond Foods (DMND, $31.25, down $0.53), Marvell Technology Group (MRVL, $15.63, down $0.27), Toll Brothers (TOLL, $19.28, down $0.22) and Toronto Dominion Bank (TD, $62.29, down $1.88).
Friday: Big Lots (BIG, $24.01, down $0.19), Royal Bank Of Canada (RY, $53.24, down $1.40) and Sirona Dental Systems (SIRO, $29.06, down $0.51).
We will be back in the morning with another update and a possible trade or two. As we head to press, Dow futures are up 57 points, Nasdaq futures are up 14 while the S&P 500 futures are higher by 7…
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Dendreon Rumors Making Rounds Again
Monday, November 30th, 2009
1:00pm (EST)
It’s been another battle today as both bulls and bears struggle to gain momentum. The Dow opened with a slight loss and traded to a low of 10,273 before bouncing back and touching a high of 10,364. As Wall Street gets ready for the 2nd half of today’s action, the Dow is currently down 30 points to 10,280.
The market got a lift after the November Chicago PMI came in at 56.1, which was better than the 53 estimate that had been expected and is up from the 54.2 number we got last month. It looks like business activity in the U.S. Midwest is picking up.
As far as specific stocks we are following today…
Dendreon (DNDN, $27.33, up $0.09), which is frequently mentioned here at MomentumOptionsTrading.com, is getting a little bump today on rumors that AstraZeneca (AZN, $44.59, down $0.70) is looking at acquiring the company for $40 a share. We have been following this stock for nearly three years now and we have repeatedly said that we think Dendreon is a takeover candidate.
We have also mentioned the market potential of the company’s Provenge drug could be as high as $2.5 billion. The company will also host an Investor Conference on Tuesday from London. Hmmm…it’s too early to draw conclusions but the CEO himself has said they are looking to partner with someone overseas.
Other water-cooler talk we are hearing…Illumina (ILMN, $28.56, down $0.06) could be on Johnson & Johnson’s (JNJ, $62.57, down $0.32) list as an acquisition target. There are rumblings that JNJ could offer up to $38 a share for the company. Illumina has been a potential takeover target for months now and there are several firms on Wall Street who believe the same thing.
It looks like we missed the big move in American International Group (AIG, $29.30, down $4.00) this morning. We have a history with this company as well. In July, we profiled two bearish trades in AIG that made our subscribers 70% and 130%, respectively, on put options. We have been hesitant to go back to the well because of the volatility and the fact that the stock had been making new highs. In August the stock traded to a high of $55.
We had noticed the consolidation in the $35 area recently but today’s break below $30 has our attention. Today’s 12% drop in the shares have been a windfall for option traders. We think there could be further weakness and we take a look at some put options in the Members Area that are up a whopping 360% today!
Tags: American International Group, AstraZeneca, Dendreon, Illumina, momentum stock option trading, option trading online, option trading picks, options mentoring, options newsletters, options track record, support and resistance levels, triple-digit option trades
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