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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
Posted in Company Commentary, Market Analysis, Trading Tips, Watch Lists | Comments Off
Monday, November 30th, 2009
9:05am (EST)
Futures are pointing to a lower open this morning as Wall Street tries to balance concern about fallout from Dubai’s debt crisis against good Black Friday news. Dubai’s market, which was opened today for the first time since the news announcement, fell nearly 6%.
Futures were higher as we headed to press last night. The Dow futures were up over 50 points but are now up only 18 after being lower by 10 earlier this morning.
There is worry that a $60 billion Dubai debt default could touch off a new round of credit market worries, which plagued stocks last year as Lehman Brothers collapsed and banks stopped lending to each other. Wall Street will be watching these developments and we are sure there are other fallouts to come from this.
One thing that could help the market today is the holiday shopping season. Preliminary figures show sales rose 0.5% on Friday, and online sales jumped 11% Thursday and Friday.
Gold is down $4 to 1,170 an ounce.
The market is showing mixed signals but we still like a couple of trades for today. Both are covered in the Members Area this morning…
Tags: 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
Posted in Company Commentary, Market Analysis, Market Commentary | Comments Off
Sunday, November 29th, 2009
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…
Tags: option trading online, option trading picks, options mentoring, options newsletters, options track record, support and resistance levels, triple-digit option trades
Posted in Company Commentary, Economic News, Market Analysis, Market Commentary, Weekly Wrap | Comments Off
Friday, November 27th, 2009
3:05pm (EST)
We wanted to wait until the market closed to give today’s mid-day update.
The market absorbed the Dubai news better than we thought and we said it would come down to how hard the bulls fought back or how hard the bears pushed. Judging by today’s action, it looks as though the bulls may have taken the bears best shot and they are still standing.
Everybody has been looking for a reason to sell the market and today’s big event could have been a lot worse. Granted, there wasn’t a lot of liquidity with the short session and the holiday but we have all weekend to digest what this news means over the near-term.
The Dow sank to a low of 10,231 and ended the day at 10,309, down 154 points. We had factored in a drop of 3% for the day and the market was down a little over half of that on average.
The fact that the Dow held 10,300 was impressive. This level acted as resistance and has now become support although we are teetering on both sides of that debate.
The S&P 500 slipped just below the 1,100 level and closed at 1,091, down 19 points. The low was 1,083 so 1,070 held. The Nasdaq dropped 37 points to close at 2,138 and traded to a low of 2,113. We held 2,100 which was another good sign.
We will be back Sunday night with a more in-depth look at today’s action and next week’s outlook. We have updated all of the current trades in the Members Area…
Tags: option trading online, option trading picks, options mentoring, options newsletters, options track record, support and resistance levels, triple-digit option trades
Posted in Market Analysis, Market Commentary, Trading Psychology | Comments Off
Friday, November 27th, 2009
8:35am (EST)
Folks, we are looking at a NASTY open this morning.
After pushing the major averages to new highs for the year, the bulls will be in trouble today as the bears looked poised for a HUGE market correction today. We were up late checking the futures market and shortly after midnight the Dow futures we down a whopping 247 points to 10,195. The S&P 500 futures are off by 32 to 1,076 while the Nasdaq 100 futures are lower by 54 points to 1,740.
There is news out of Dubai that shook the Asia markets and there was a heavy sell-off as investors worried about banks’ exposure to Dubai World’s debt. Dubai World is the city state’s largest corporate entity and has asked creditors for as six-month stay on debt repayments of nearly $60 billion.
Commodities are also trading sharply lower this morning, with oil futures down 5%.
The stock market could easily lose 3% today and it will no doubt put a stop to the momentum the bulls have carried since March. What will be important today is how much the bulls fight back or how hard the bears push.
We have been bullish right along with the market but it doesn’t mean we haven’t prepared for a correction. The major indexes pushed right through our short-term targets and we have been saying how these were meaningful support and resistance levels.
From the November 8th Weekly Wrap when the Dow was at 10,000, the Nasdaq was at 2,112 and the S&P 500 was at 1,069, here is what we said:
“Our near-term targets for the Dow remain 10,300-10,400 to the upside and 9,650 is short-term support.
For the S&P 500…it has been struggling with 1,100 but a break above that level could lead to a run to 1,200. Support is strong at 1,000 and even down to 970 but a break below these levels will spell trouble.
If the Nasdaq were to breakout, a run to 2,275 could be in the cards. Support is at 2,000-2,025 and a break below that could mean a trip to 1,800 quickly.” (END)
The near-term support levels for the Dow are 10,000 then 9,650, for the S&P it would be 1,070 and 1,000, and the Nasdaq levels to watch are 2,100 then 2,000.
The Dow closed at 10,464 on Wednesday so a 3% correction would put the Dow at 10,100. The S&P closed at 1,110 and would be knocked down to 1,080. The Nasdaq is at 2,176 and would fall to 2,100.
Don’t let the shock of a market correction scare you. We may be forced out of some of our bullish trades today but we can change sentiment on a moment’s notice. We are not a bull or a bear. All we want is market action and we are sure to get it from here on out.
The thing that scares most investors away from the stock market are days like today. Last year at this time you will notice our 2008 portfolio was heavy on the put option side as we continued to play the market’s weakness following last year’s market correction. The point is you can make just as much money with stock options on the way down as you can on the way up.
We doubt Dubai’s financial troubles will trigger a significant global fallout but the news has made us cautious on any year-end rally. We should get a clearer picture today and next week when Wall Street gets back from vacation. The market is only open half a day today and will close at 1pm.
We do profile one trade that may do well should we see continued weakness. It is a direct play on today’s news and we are trying to buy at the open. Current subscribers, check the Members Area for the updates.
As we head to press, Dow futures are down 200 points…
Tags: option trading online, option trading picks, options mentoring, options newsletters, options track record, support and resistance levels, triple-digit option trades
Posted in Market Analysis, Market Commentary, Option Trades, Strategies, Trading Psychology | Comments Off
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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
Posted in Company Commentary, Market Analysis, Trading Tips, Watch Lists | Comments Off