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Monday, March 29th, 2010
9:10am (EST)
Futures are pointing towards a higher open this morning and held steady after a report showed consumer spending rose again in February. It is a big week for economic news and earnings will take a back seat for much of the week.
Consumer spending came in as expected and rose 0.3% in February. It was the fifth consecutive month that spending rose. Meanwhile, the same report showed personal income had no increase versus expectations for a 0.1% pop last month.
We are also getting a little closure on Greece’s bailout as European leaders and the International Monetary Fund agreed last week to provide a safety net should Greece fail to raise money by issuing new debt.
Greece plans to issue a new seven-year bond that is expected to price in the coming days.
As a result, the bulls look ready to run right out of the gate.
As we head to press, Dow futures are up 36, or 0.3%, to 10,834. The S&P 500 index futures are higher by 5, or 0.5% to 1,168, while the Nasdaq 100 futures rose 9 points to 1,960.
Earnings for the week (quotes are from Friday’s close):
Monday: Apollo Group (APOL, $61.28, down $1.15), Cal-Maine Foods (CALM, $37.26, flat), Krispy Kreme Doughnut (KKD, $4.00, up $0.07) and Neogen (NEOG, $25.33, down $0.17).
Tuesday: FirstCity Financial (FCFC, $5.75, down $0.09), Fuqi International (FUQI, $11.67, up $0.30), Layne Christensen (LAYN, $27.96, up $0.40) SAIC (SAI, $19.26, up $0.16) and Sealy (ZZ, $3.64, down $0.09).
Wednesday: A-Power Energy Generation Systems (APWR, $11.65, up $0.12), Acuity Brands (AYI, $41.56, up $0.44), Micron Technology (MU, $10.49, up $0.11) and Research In Motion (RIMM, $75.06, up $1.63).
Thursday: CarMax (KMX, $25.01, up $0.50), Jos. A. Bank Clothiers (JOSB, $52.09, up $0.72) and Rite Aid (RAD, $1.68, up $0.03).
Friday: Market CLOSED
We have a lot to cover this morning in our Members Area, including a new trade. Subscribers, check for the updates.
Tags: option picks, option signals, options alerts, stock options trading
Posted in Earnings, Economic News | Comments Off
Sunday, March 28th, 2010
7:15pm (EST)
All things considered, Friday’s close wasn’t too bad…
We were hoping the bulls would post a strong showing going into the closing bell but the market settled near even after spending much of the session marching higher.
Of course, Wall Street’s eyes were on Greece and there was a sense of relief after the European leaders agreed to bail out the debt-laden country, with help from the International Monetary Fund, if conditions get significantly worse.
The safety net for Greece took pressure off the euro, sending it up slightly against the dollar but that will most likely be short-lived. Expect the euro to get weaker.
We also had some geopolitical concerns over North and South Korea that made the market nervous and sparked the afternoon sell-off but those reports were overblown. All-in-all it was another solid weekly victory for the bulls – their fourth in a row - as many analysts continue to doubt the rally.
The Dow ended the day with a 9 point gain to close at 10,850 after hitting a high of 10,934. For the week, the index was up 108 points, or 1%, and still looks poised to break 11,000. As many of you know, we were hoping for a break above 10,800 which had been the first wave of resistance before we could set our site on 11,000. Mission accomplished. On Thursday, the Dow reached a high of 10,985.
The S&P 500 added a point to settle at 1,166 and for the week the index added nearly 7 points, or 0.6%. On Thursday, the S&P hit a high of 1,180 and all week it toyed with 1,175. We would like to see a close ABOVE this level which could then carry us to 1,200.
As far as the Nasdaq, we were a little disappointed to see the index finish in the red as it lost 2 points and closed at 2,395. For the week, Tech was up 20 points, or 0.9%, and traded above 2,400 each day. We are looking for a close above this level to clear way for us to test 2,500.
Unless the wheels fall off the wagon, it looks like the major indexes are poised to post solid quarterly gains going into the final week of trading for the first quarter. The Dow is up 4%, the S&P is up 4.6%, and the Nasdaq is up 5.6%.
As we near the top of our trading ranges, we remain bullish but we also know the current environment won’t last forever. We think the market can rally into April but at some point the talking heads will get their pullback and they will be the first to tell you we are in correction mode.
The S&P hasn’t seen a 1% correction in over a month so sooner or later the law of averages will catch up with the bulls but for now the trend is our friend.
One sector that continues to see new life is the IPO market. This has been a bullish sign as companies become public at their offering prices and the good ones are also getting a pop. Many IPOs so far this year had been cut, postponed or canceled as investors shied away from risk but that is changing.
MaxLinear (MXL, $18.62, up $0.58) went public on Wednesday as shares opened at $17.95, nearly 30% higher than its IPO price, and later rose to $18.70, on its first day of trading.
The company sold 6.4 million shares for $14 each, and pocketed a little over $90 million. MaxLinear makes chips that are used mainly in mobile handsets but its products can also be found in cable boxes, digital televisions and PCs.
China Lodging (HTHT, $13.92, up $1.67) went public Friday and priced its IPO of 9 million shares at $12.25. The company, which operates a chain of budget hotels in China, raised about $110 million.
Neither of these IPO’s trade options, yet, but they will over the next few weeks. MaxLinear will be the one we are more likely to trade down the road but we still have to wait for momentum to develop.
In other IPO news, Baltic Trading (BALT, $13.48, down $0.02) and Crude Carriers (CRU, $16.95, flat) are two new offerings and are newly formed bulk shippers. Baltic Trading plans to conduct a shipping business focused on the dry-bulk industry spot market while Crude Carriers plans to go after a shipping business focused on the crude tanker industry. We aren’t too crazy about this sector right now and would stay away from both of them.
AVEO Pharmaceuticals (AVEO, $8.81, up $0.26) popped its cherry but closed below its IPO price on their first day of trading.
There were also two other pricings that struggled to make their debut. Another dry shipping company, Alma Maritime, postponed its IPO due to market conditions, while Chinese ad firm Redgate Media failed to price after lowering its expected range.
As far as earnings news, we will update this topic in the morning but the only company we are interested in playing this week is Research In Motion (RIMM, $75.06, up $1.63). The company reports earnings on Wednesday after the bell.
We are going to show our subscribers several ways to play this event in detail inside our Members Area on Monday morning but here is the breakdown.
The straddle option trade (or chicken trade) is pricing in a 10% move in the stock and here is the math. If you do the straddle trade we profile, RIMM will need to be at $82+ or below $68. This trade could yield 10% or more depending on how the stock reacts or it could lose money if shares stay flat.
As far as a strangle option trade, the odds favor an even better return as we can play some out-of-the-money options in anticipation of a huge price move for the stock. At current prices, we would need RIMM to trade above $83 or below $67 before we can start ringing the register.
These two types of trades provide protection because we would be using both call and put options. It’s a safety net and we would need a huge move in the stock after earnings and into April. The beauty of these trades is that it’s possible to make money on BOTH the calls and puts if the stock pops and then drops or drops and then pops.
Of course, we can also play RIMM with no protection in hopes of doubling our money. The calls we would use are priced right under $2 and we would use those if we expect RIMM to trade above $79. If the stock made it to $82 they will likely return 100%.
There is also the chance that RIMM misses their numbers or disappoints Wall Street and the stock tanks. We could use the put options which are priced near $1.50. In this case, we would need RIMM to trade below $70 to make triple-digits.
We are still doing the research (pun intended) on this one but we might be pulling the trigger on a possible option trade in the morning.
There is also another interesting trade we are putting the finishing touches on that we think has a good chance of doubling quickly or by the summertime. The stock was approaching its 52-week high of $45 last week but fell 10% over Thursday and Friday. We smell a “BUY”.
As we head to press, Dow futures are up 21 points while the S&P futures are up 2.5 points. Nasdaq 100 futures are higher by 3.5 points. It looks like the bulls are up doing their homework with us and unless something changes we should be starting higher on Monday. We will be back at 9am (EST) sharp!
Tags: chicken option trade, option picks, option signals, options alerts, Research In Motion earnings, stock options trading, straddle option trade, strangle option trade
Posted in Earnings, Market Analysis, Market Commentary, strangle option trades, Strategies, Trading Tips, Weekly Wrap | Comments Off
Friday, March 26th, 2010
12:50pm (EST)
The market is back on track after European leaders agreed to a bailout program for Greece. Help will come from a joint European Union and International Monetary Fund aid program that will help Greece and other European nations facing rising debt.
We also got a decent consumer sentiment report after the open which showed consumers are still spending and growing more comfortable about the economy. The March University of Michigan Confidence reading came in better-than-expected, at 73.6 versus estimates for a reading of 73.0.
We said this morning we would like to see the bulls stay steady throughout the day and then see them buying into the close. So far, so good.
As we write this, the Dow is up 48 points, or 0.4%, to 10,889 and has reached a high of 10,909. We would love to see a close above 10,900 but we still think the Dow breaks 11,000 over the next few weeks, if not today. If the bulls are buying in the final hour then we could have that blow-off the roof type rally…which we haven’t seen yet.
The S&P 500 is higher by 6 points, or 0.5%, and is at 1,171. The index reached a high of 1,174 and we would like to see a close above this level. Our target of 1,175 has been reached and hit several times which has cleared the way for a run to 1,200.
The Nasdaq is showing a gain of 8 points, or 0.3%, to 2,405 and has traded as high as 2,412. Our next target is 2,500 for the index.
The Casino stocks have been on fire of late and are having another good day as the sector is up more than 4% for the session. We have made some great calls on these stocks in the past and they are one of our favorite groups to trade. We were looking at Las Vegas Sands ($LVS, $22.01, up $1.08) when it broke $20 last week as this was resistance back in January when we profiled a trade that nabbed our subscribers 30%. It still looks interesting and maybe we will revist the story this weekend in our Weekly Wrap.
Other stocks in the sector are also getting a pop. Boyd Gaming (BYD, $10.27, up $0.58) and MGM Mirage (MGM, $12.71, up $0.74) are up 6%; Wynn Resorts (WYNN, $77.58, up $3.17) is higher by 4%.
We will be back Sunday evening with the Weekly Wrap.
Tags: Casino stocks, Las Vegas Sands, option picks, option signals, options alerts, stock options trading
Posted in Company Commentary, Hot Stocks, Market Analysis, Market Commentary | Comments Off
Friday, March 26th, 2010
9:00am (EST)
The bulls were in the driver’s seat on Thursday – in cruise control – until they hit a traffic jam late in the day. The market soared at the open as the bulls exploited Wednesday’s dip as an opportune time to buy. The short-sellers were crying “uncle”.
We got a hat trick of good news before the bell, 1) Qualcomm (QCOM, $42.19, up $2.00) upped its yearly outlook, 2) Best Buy (BBY, $42.66, up $1.48) banged out an incredible earnings report and 3) jobless claims fell for the fourth consecutive week. And to top it off, Bernanke testified before Congress and reiterated the need for an extended period of record-low interest rates.
Add it all up and you can see why the bulls were cruising.
However, after tapping fresh 52-week highs, the keg ran dry with about an hour before the bell as the market rolled-over amid ongoing concerns over Greece’s debt. We may be closer to a resolution as the European Union (EU) is currently debating a solution for Greece’s bills. The hang-up is if they are going to dip into the International Monetary Fund (IMF) to do a bailout.
As a result, the euro tanked, the U.S. dollar jumped and the bulls’ momentum came to a screeching halt. Another roadblock was an auction for government debt which drew less interest than in past months.
The boys on the hill sold $32 billion in seven-year notes and bond prices tanked. If the government has to boost interest rates to entice buyers then they run the risk of hurting the economy by driving up borrowing costs.
The Dow managed to finish with a 5 point gain and finished at 10,841 but reached a high of 10,955 before falling back. The S&P 500 slipped 2 points and closed at 1,165 after touching a high of 1,180.
The Nasdaq Composite dropped a point and settled at 2,397. The index kissed 2,432 then got slapped.
Of course, that was yesterday and this morning it looks like the bulls are ready to ride again.
The Commerce Department reported that the economy grew at a 5.6% pace in the October-to-December quarter in its third and final estimate of economic activity during the period.
The government first estimated that the economy grew at a 5.7% pace in the fourth quarter then boosted that estimate to a 5.9% pace last month before lowering it slightly, again, last Friday.
Futures were already pointing towards a higher open and stayed strong after the report. We would like to see the bulls hold today’s opening gains throughout the day.
As we head to press, Dow futures are higher by 21 points to 10,812 while the S&P futures are showing a 3 point pop to 1,165. The Nasdaq futures are up 8 to 1,958.
Tags: BBY, Best Buy, option picks, option signals, options alerts, QCOM, Qualcom upgrade, stock options trading
Posted in Economic News, Market Analysis, Market Commentary | Comments Off
Thursday, March 25th, 2010
1:15pm (EST)
Folks, we have been super busy today looking at charts and updating our picks.
The bulls are pushing the Dow towards 11,000 as the index is up 110 points to 10,946. The S&P 500 is higher by 12 points to 1,180 while the Nasdaq is jumping 31 points and is at 2,430.
The shorts continue to get crushed and we are now entering the second set of targets we have set for the indexes. Dow 11,000, S&P 1,200; and Nasdaq 2,500.
We are so excited we can’t wait to get into the Members Area. We will do a long write-up tonight and give a full update in the morning on the juicy tidbits floating out there today.
We are locking in profits and moving up stops on quite a few of our trades so we are being a little short today with our commentary.
Tags: bullish rally, DOW 11000, new market highs, option picks, option signals, options alerts, stock options trading
Posted in Market Analysis, Market Commentary | Comments Off
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MomentumOptionsTrading.com Weekly Wrap for 3/28/10
Sunday, March 28th, 2010
7:15pm (EST)
All things considered, Friday’s close wasn’t too bad…
We were hoping the bulls would post a strong showing going into the closing bell but the market settled near even after spending much of the session marching higher.
Of course, Wall Street’s eyes were on Greece and there was a sense of relief after the European leaders agreed to bail out the debt-laden country, with help from the International Monetary Fund, if conditions get significantly worse.
The safety net for Greece took pressure off the euro, sending it up slightly against the dollar but that will most likely be short-lived. Expect the euro to get weaker.
We also had some geopolitical concerns over North and South Korea that made the market nervous and sparked the afternoon sell-off but those reports were overblown. All-in-all it was another solid weekly victory for the bulls – their fourth in a row - as many analysts continue to doubt the rally.
The Dow ended the day with a 9 point gain to close at 10,850 after hitting a high of 10,934. For the week, the index was up 108 points, or 1%, and still looks poised to break 11,000. As many of you know, we were hoping for a break above 10,800 which had been the first wave of resistance before we could set our site on 11,000. Mission accomplished. On Thursday, the Dow reached a high of 10,985.
The S&P 500 added a point to settle at 1,166 and for the week the index added nearly 7 points, or 0.6%. On Thursday, the S&P hit a high of 1,180 and all week it toyed with 1,175. We would like to see a close ABOVE this level which could then carry us to 1,200.
As far as the Nasdaq, we were a little disappointed to see the index finish in the red as it lost 2 points and closed at 2,395. For the week, Tech was up 20 points, or 0.9%, and traded above 2,400 each day. We are looking for a close above this level to clear way for us to test 2,500.
Unless the wheels fall off the wagon, it looks like the major indexes are poised to post solid quarterly gains going into the final week of trading for the first quarter. The Dow is up 4%, the S&P is up 4.6%, and the Nasdaq is up 5.6%.
As we near the top of our trading ranges, we remain bullish but we also know the current environment won’t last forever. We think the market can rally into April but at some point the talking heads will get their pullback and they will be the first to tell you we are in correction mode.
The S&P hasn’t seen a 1% correction in over a month so sooner or later the law of averages will catch up with the bulls but for now the trend is our friend.
One sector that continues to see new life is the IPO market. This has been a bullish sign as companies become public at their offering prices and the good ones are also getting a pop. Many IPOs so far this year had been cut, postponed or canceled as investors shied away from risk but that is changing.
MaxLinear (MXL, $18.62, up $0.58) went public on Wednesday as shares opened at $17.95, nearly 30% higher than its IPO price, and later rose to $18.70, on its first day of trading.
The company sold 6.4 million shares for $14 each, and pocketed a little over $90 million. MaxLinear makes chips that are used mainly in mobile handsets but its products can also be found in cable boxes, digital televisions and PCs.
China Lodging (HTHT, $13.92, up $1.67) went public Friday and priced its IPO of 9 million shares at $12.25. The company, which operates a chain of budget hotels in China, raised about $110 million.
Neither of these IPO’s trade options, yet, but they will over the next few weeks. MaxLinear will be the one we are more likely to trade down the road but we still have to wait for momentum to develop.
In other IPO news, Baltic Trading (BALT, $13.48, down $0.02) and Crude Carriers (CRU, $16.95, flat) are two new offerings and are newly formed bulk shippers. Baltic Trading plans to conduct a shipping business focused on the dry-bulk industry spot market while Crude Carriers plans to go after a shipping business focused on the crude tanker industry. We aren’t too crazy about this sector right now and would stay away from both of them.
AVEO Pharmaceuticals (AVEO, $8.81, up $0.26) popped its cherry but closed below its IPO price on their first day of trading.
There were also two other pricings that struggled to make their debut. Another dry shipping company, Alma Maritime, postponed its IPO due to market conditions, while Chinese ad firm Redgate Media failed to price after lowering its expected range.
As far as earnings news, we will update this topic in the morning but the only company we are interested in playing this week is Research In Motion (RIMM, $75.06, up $1.63). The company reports earnings on Wednesday after the bell.
We are going to show our subscribers several ways to play this event in detail inside our Members Area on Monday morning but here is the breakdown.
The straddle option trade (or chicken trade) is pricing in a 10% move in the stock and here is the math. If you do the straddle trade we profile, RIMM will need to be at $82+ or below $68. This trade could yield 10% or more depending on how the stock reacts or it could lose money if shares stay flat.
As far as a strangle option trade, the odds favor an even better return as we can play some out-of-the-money options in anticipation of a huge price move for the stock. At current prices, we would need RIMM to trade above $83 or below $67 before we can start ringing the register.
These two types of trades provide protection because we would be using both call and put options. It’s a safety net and we would need a huge move in the stock after earnings and into April. The beauty of these trades is that it’s possible to make money on BOTH the calls and puts if the stock pops and then drops or drops and then pops.
Of course, we can also play RIMM with no protection in hopes of doubling our money. The calls we would use are priced right under $2 and we would use those if we expect RIMM to trade above $79. If the stock made it to $82 they will likely return 100%.
There is also the chance that RIMM misses their numbers or disappoints Wall Street and the stock tanks. We could use the put options which are priced near $1.50. In this case, we would need RIMM to trade below $70 to make triple-digits.
We are still doing the research (pun intended) on this one but we might be pulling the trigger on a possible option trade in the morning.
There is also another interesting trade we are putting the finishing touches on that we think has a good chance of doubling quickly or by the summertime. The stock was approaching its 52-week high of $45 last week but fell 10% over Thursday and Friday. We smell a “BUY”.
As we head to press, Dow futures are up 21 points while the S&P futures are up 2.5 points. Nasdaq 100 futures are higher by 3.5 points. It looks like the bulls are up doing their homework with us and unless something changes we should be starting higher on Monday. We will be back at 9am (EST) sharp!
Tags: chicken option trade, option picks, option signals, options alerts, Research In Motion earnings, stock options trading, straddle option trade, strangle option trade
Posted in Earnings, Market Analysis, Market Commentary, strangle option trades, Strategies, Trading Tips, Weekly Wrap | Comments Off