|
|
|
|
|
 |
|
|
 |
Friday, January 22nd, 2010
9:10am (EST)
The market took another pounding yesterday as the bears took the Dow down another 223 points (-2%) to 10,389. We mentioned yesterday that we hoped 10,400 would hold so we weren’t too excited about the close.
The S&P 500 tumbled 21 points, or 1.9%, to finish at 1,116 and at least held the 1,100 level. The damage to the Nasdaq was “limited” to a 25 point loss, or 1.1%, as the Tech-heavy index finished at 2,265.
We have talked over and over again about Dow 10,800; S&P 500 1,175 and Nasdaq 2,275. Those were our targets we set back in August and it has been well documented in the Weekly Wrap we do on Sunday nights.
The Dow hit a high of 10,767 last Thursday and on Tuesday the index hit a high of 10,763. We came within spitting distance of hitting 10,800. Folks, if you find another newsletter that has called this top (if this is the top) back in August for the Dow, please let us know.
We have an uncanny ability to get a good read on the market and we have told you the waters would be murky once we got here.
Exactly one week ago we had this to say:
“We have mentioned our targets for the indexes and from our camp it looks like the market is nearing a top which makes it harder to trade. It’s possible we rally for a few more weeks but once we get to February we think there’s a chance of a 5%-10% pullback.” (END)
We were expecting a market breakout but the Obama news is really killing the momentum of the bulls and the Financial stocks. Earnings have been spectacular but we have not seen the blow-off type rally that would normally follow with this kind of market environment. Companies are reporting jaw-dropping results, especially the financials, but are getting crushed.
Google (GOOG, $562.75, down $20.23) reported after the bell last night and easily beat Wall Street’s expectations. However, inn pre-market trading, shares are sharply lower.
As we head to press, Dow futures are lower by 46 while the S&P futures are down 4 points. Meanwhile, the Nasdaq futures are higher by 3 points. Should be another interesting day…
Tags: Google's earnings, option picks, option signals, options alerts, stock options trading
Posted in Company Commentary, Earnings, Market Analysis, Market Commentary | Comments Off
Thursday, January 21st, 2010
1:15pm (EST)
The market is taking another beating today as the Dow is down 210 points to 10,393. The index saw a little green at the open but it has been all downhill since. The S&P 500 is down 20 points to 1,117 while the Nasdaq is off by 27 to 2,263. The big cloud currently raining on the bulls parade is President Obama’s strong comments on the banks.
We have told you how Wall Street’s buddy wants to put a heavy tax on the bonuses that these firms are paying out and you can tell traders are clearly upset. Goldman Sachs (GS, $160.07, down $7.72) is down 5% after beating earnings estimates by $3.00. Folks, that is three dollars a share!
The stock started off in positive territory and reached a high of $171 even before the whipping started. Goldman made nearly $5 billion for the quarter and earned $8.20 a share on revenue of $9.6 billion. Wall Street was expecting $5.20 a share.
The company has set aside $16 billion of its revenues for bonuses. We try to remain neutral on these types of situations because we don’t get emotional and we have to trade what the market gives us. We have stayed away from trading the Financial stocks recently because of the volatility but we continue to watch them. Bank of America (BAC, $15.39, down $1.10) is looking like an awesome LEAP trade at these levels but could go lower. By year-end this will be a $25 stock.
We would have liked to see the Dow hold 10,400 but that went out the window when Obama started speaking. The S&P 500 needs to hold 1,100 to convince us we will get one last rally before the month is over. We have talked about reaching a top for the market and usually volatility will pick up if a big move is in store. We are seeing that right now.
Things will really get interesting when Google (GOOG, $575.97, down $4.44) reports after the bell today. We have been covering this company a lot recently and you can bet shares will be moving in after-hours trading tonight. We would love to do an earnings trade on this one but our portfolio is full right now.
Before we go today we thought we would update the Berkshire Hathaway Class B (BRK/B, $72.01, up $2.49) 5-for-1 stock split. Shares opened at $71.13 and has reached a high of $73.43. If we can get one last rally then we think this one could quickly go to $80. Everybody, the Buffett is open to get one of America’s best run companies ever at double-digit prices.
Tags: Bank of America LEAP options, Goldman Sachs earnings, option picks, option signals, options alerts, stock options trading
Posted in Earnings, Hot Stocks, Market Analysis, Market Commentary | Comments Off
Thursday, January 21st, 2010
9:50am (EST)
We have just released a new trade in the Members Area.
Posted in Hot Stocks | Comments Off
Thursday, January 21st, 2010
9:00am (EST)
The market got pounded on Wednesday as the bears finally did some damage and drew some blood. The bulls did manage to cut the losses in half by the closing bell but they didn’t get out of bed until way after lunch.
The Dow experienced some quick selling pressure throughout the morning and dropped to a low of 10,517. This represented over a 200 point haircut but the index closed the session at 10,603, down 122 points.
The S&P 500 held critical support levels as it hit a low of 1,129. We trust it down to 1,100 and the index finished at 1,138, down 12 for the day.
The Nasdaq crossed the finish line at 2,291, down 29 points for the day and tanked to a low of 2,268.
The 1% losses could have been much worse for the market and the old cliché of “this is a trader’s market” is being echoed by the money managing pros. Folks, if the market is headed lower it won’t be a trader’s market. There will plenty of put option trades available if stocks are headed for a correction.
The bulls can blame yesterday on China, or some of the crummy economic news we got. Word is China wants banks to stop issuing loans, suggesting that liquidity is quickly drying up in the global credit market. As far as economic news, housing starts dropped 4% during the month of December.
And now for the news we have been waiting to report…
Warren Buffett did what he told Wall Street he would never do.
He split his company’s stock.
Berkshire Hathaway announced yesterday that its shareholders approved a 50-for-1 split of its Class B stock (BRK.B, $3,476.00, up $144.00) that will take effect TODAY.
There will not be a record date or a payable date and the stock should open on the New York Stock Exchange near $70 when the opening bell rings in 30 minutes. The best part of this is that we can now trade options on the Baby Berk’s at discounted prices.
We normally don’t like playing options on stocks that trade over $200 and we are hesitant to trade options on stocks over $100 because the premiums can get expensive but sometimes we do..
Take for instance the options on Berkshire’s Class B shares. You could have bought the February 3,500 calls (BVQBG, $75.00, up $58.00) for $17 on Tuesday and you would have made 340% on your investment yesterday. Of course, most traders did not and these call options opened at $46.10 on Wednesday.
The option chains are thinly traded as you might imagine because of the high premiums and the stock price. However, that is about to change…
eBay (EBAY, $22.23, down $1.03) made a nice bounce last night after earnings beat Wall Street estimates. PayPal has turned out to be perhaps ebay’s finest acquisition and continues to pay dividends.
The company reported a profit of $1.4 billion, or $1.02 a share, up from $367 million, or $0.29 a share, a year ago. After “adjustments” eBay’s numbers were really $586 million, or $0.44 a share. Analysts had pegged 40 cents a share. Shares were up $1.80, to $24.03 in extended trading last night.
As we head to press, Dow futures are down 16 points after being positive for much of the morning; S&P 500 and Nasdaq futures are down a point about a point each. Current subscribers, please check the Members Area for the latest updates.
Tags: Berkshire Hathaway stock split, eBay earnings, option picks, option signals, options alerts, stock options trading
Posted in Company Commentary, Earnings, Economic News, Market Commentary | Comments Off
Wednesday, January 20th, 2010
1:00pm (EST)
The market has been in negative territory all morning and we don’t expect much to change in the afternoon session. Most of the indexes are holding support but things could get ugly. We have mentioned how we thought the market was approaching a top in the Weekly Wrap and although it’s too early to tell if we are in correction mood it is starting to feel like one.
Last Friday, we also had this to say:
“We have mentioned our targets for the indexes and from our camp it looks like the market is nearing a top which makes it harder to trade. It’s possible we rally for a few more weeks but once we get to February we think there’s a chance of a 5%-10% pullback.” (END)
If the above scenario does play out like we have mapped out then maybe we see another good buying opportunity. Maybe we don’t and the market will continue even lower. One thing for certain, volatility is picking up.
Currently the Dow is down 183 points to 10,541 while the S&P 500 is off by 18 points to 1,131. Meanwhile, the Nasdaq is getting trounced for a 43 point loss and is at 2,277.
There are some other “interesting” stories that we want to highlight…
We did our best Linda Blair when we heard the news this morning that Apple (AAPL, $211.09, down $3.95) is in talks with Microsoft (MSFT, $30.40, down $0.70) about putting Bing, Microsoft’s search engine, on its iPhone. Apple currently uses Google’s (GOOG, $577.42, down $10.20) search engine. Folks, the war between Apple and Google is growing by the minute and we could be setting up for an epic battle.
Elsewhere, Rambus (RMBS, $24.30, up $$3.17) has finally gotten “its day in court”. The company got a huge $1 billion settlement against Samsung Electronics after years of litigation. The settlement was actually for $900 million but we wanted to round up as we expect Rambus to settle or win its other cases.
Samsung has agreed to drop all claims and will pay the money over five years.
The Gold stocks are taking a step back today and we are eyeing Barrick Gold (ABX, $37.55, down $2.11) as it is resting at support levels. We aren’t quite sure if the stock is ready to fold like a cheap lawn chair or pop like a cork but there is volatility which is something we love when trading options.
We will be back in the morning and we have updated the Members Area for our current trades. Oh, and a special thanks to Eric who did the voice over on our video. Folks, if you haven’t seen it yet, take a peek. Scroll down the home page and you will see it.
Tags: Apple Microsoft iPhone pact, barrick Gold straddle options trade, Bing serach engine, option picks, option signals, options alerts, Rambus litigation issues, stock options trading
Posted in Company Commentary, Gold, Market Analysis, Trading Psychology | Comments Off
|
|
|  | | | |
Get RSS Feed
Bears Go For Hat Trick
Friday, January 22nd, 2010
9:10am (EST)
The market took another pounding yesterday as the bears took the Dow down another 223 points (-2%) to 10,389. We mentioned yesterday that we hoped 10,400 would hold so we weren’t too excited about the close.
The S&P 500 tumbled 21 points, or 1.9%, to finish at 1,116 and at least held the 1,100 level. The damage to the Nasdaq was “limited” to a 25 point loss, or 1.1%, as the Tech-heavy index finished at 2,265.
We have talked over and over again about Dow 10,800; S&P 500 1,175 and Nasdaq 2,275. Those were our targets we set back in August and it has been well documented in the Weekly Wrap we do on Sunday nights.
The Dow hit a high of 10,767 last Thursday and on Tuesday the index hit a high of 10,763. We came within spitting distance of hitting 10,800. Folks, if you find another newsletter that has called this top (if this is the top) back in August for the Dow, please let us know.
We have an uncanny ability to get a good read on the market and we have told you the waters would be murky once we got here.
Exactly one week ago we had this to say:
“We have mentioned our targets for the indexes and from our camp it looks like the market is nearing a top which makes it harder to trade. It’s possible we rally for a few more weeks but once we get to February we think there’s a chance of a 5%-10% pullback.” (END)
We were expecting a market breakout but the Obama news is really killing the momentum of the bulls and the Financial stocks. Earnings have been spectacular but we have not seen the blow-off type rally that would normally follow with this kind of market environment. Companies are reporting jaw-dropping results, especially the financials, but are getting crushed.
Google (GOOG, $562.75, down $20.23) reported after the bell last night and easily beat Wall Street’s expectations. However, inn pre-market trading, shares are sharply lower.
As we head to press, Dow futures are lower by 46 while the S&P futures are down 4 points. Meanwhile, the Nasdaq futures are higher by 3 points. Should be another interesting day…
Tags: Google's earnings, option picks, option signals, options alerts, stock options trading
Posted in Company Commentary, Earnings, Market Analysis, Market Commentary | Comments Off