12:30pm (EST)
The market is waffling ahead of the big Fed announcement and has traded on both sides of the ledger as the bulls and bears await today’s statements. There was some good news on the housing front as we reported this morning but the jury is still out on that sector as foreclosures continue to creep up at an alarming rate. There were also some solid earnings reports and there are some Wall Street darlings making news highs but nothing is moving the market needle.
AutoZone (AZO, $217.48, down $2.66) is trading slightly lower despite beating Wall Street’s estimates. The company reported a profit of $269 million, or $5.66 a share, versus $236 million, or $4.43 a share, in the year ago period. Revenue rose 10% to $2.5 billion from $2.3 billion. Analysts were expecting earnings of $5.44 a share on $2.4 billion in revenue.

Traders were positioned for negative news going into the close yesterday as there is a HUGE short-base that continues to build in this stock as it backs off its 52-week high of $223. It would have been tough to bet against this one which is why we stayed on the sidelines but we knew there was a slight risk the company could say something negative despite clicking on all cylinders.
There is still a chance of a rebound this afternoon, especially if the market runs higher, and any short covering could be extreme. As current short levels, it would take nearly 7 trading days for the bears to cover which could push shares to all-time highs. But that is putting the cart before the horse…

Elsewhere, Apple (AAPL, $283.62, up $0.39) and Amazon.com (AMZN, $152.19, up $0.89) have hit 52-week highs and could be setting up for parabolic moves depending on what direction the market takes over the next few weeks. We would rather face a firing squad then short Apple but Amazon could be the ticket for a BIG payday if shares retreat. In mid-August, the stock was in the $120’s but tested $105 on JULY 23! Yeah, Amazon has zoomed 50 points in two months, folks. Needless to say, we will be adding this one to our Watch List as a possible short or maybe even a strangle option trade.
Keeping it in the A’s, Adobe Systems (ADBE, $33.11, flat) will give Wall Street their numbers after the close and we are expecting a rather large move on Wednesday. We aren’t sure if they will match, beat, or blow smoke on their results but shares did get a shot in the arm after Apple welcomed the company back with open arms. In fact, Adobe released new software for the Mac for the first time ever today so shares could get a lift if they can wow investors with their numbers.
As we head to press, the Dow is lower by 15 points to 10,738 while the S&P 500 is down 3 to 1,139. The Nasdaq is off by 7 points to 2,348. We will be back in the morning with a full update and we have updated our current trades to reflect today’s action. Subscribers, check for the latest news inside the Members Area.
Tags: AAPL, ADBE, AMZN, AZO, explain the concept of options, momentum options trading, option picks, option trading blog, RIMM
This entry was posted
on Tuesday, September 21st, 2010 at 12:31 PM and is filed under Apple, Earnings, Market Analysis, Market Commentary.
You can follow any responses to this entry through the RSS 2.0 feed.
Both comments and pings are currently closed.
Market Slightly Lower Ahead of Fed Statements
12:30pm (EST)
The market is waffling ahead of the big Fed announcement and has traded on both sides of the ledger as the bulls and bears await today’s statements. There was some good news on the housing front as we reported this morning but the jury is still out on that sector as foreclosures continue to creep up at an alarming rate. There were also some solid earnings reports and there are some Wall Street darlings making news highs but nothing is moving the market needle.
AutoZone (AZO, $217.48, down $2.66) is trading slightly lower despite beating Wall Street’s estimates. The company reported a profit of $269 million, or $5.66 a share, versus $236 million, or $4.43 a share, in the year ago period. Revenue rose 10% to $2.5 billion from $2.3 billion. Analysts were expecting earnings of $5.44 a share on $2.4 billion in revenue.
Traders were positioned for negative news going into the close yesterday as there is a HUGE short-base that continues to build in this stock as it backs off its 52-week high of $223. It would have been tough to bet against this one which is why we stayed on the sidelines but we knew there was a slight risk the company could say something negative despite clicking on all cylinders.
There is still a chance of a rebound this afternoon, especially if the market runs higher, and any short covering could be extreme. As current short levels, it would take nearly 7 trading days for the bears to cover which could push shares to all-time highs. But that is putting the cart before the horse…
Elsewhere, Apple (AAPL, $283.62, up $0.39) and Amazon.com (AMZN, $152.19, up $0.89) have hit 52-week highs and could be setting up for parabolic moves depending on what direction the market takes over the next few weeks. We would rather face a firing squad then short Apple but Amazon could be the ticket for a BIG payday if shares retreat. In mid-August, the stock was in the $120’s but tested $105 on JULY 23! Yeah, Amazon has zoomed 50 points in two months, folks. Needless to say, we will be adding this one to our Watch List as a possible short or maybe even a strangle option trade.
Keeping it in the A’s, Adobe Systems (ADBE, $33.11, flat) will give Wall Street their numbers after the close and we are expecting a rather large move on Wednesday. We aren’t sure if they will match, beat, or blow smoke on their results but shares did get a shot in the arm after Apple welcomed the company back with open arms. In fact, Adobe released new software for the Mac for the first time ever today so shares could get a lift if they can wow investors with their numbers.
As we head to press, the Dow is lower by 15 points to 10,738 while the S&P 500 is down 3 to 1,139. The Nasdaq is off by 7 points to 2,348. We will be back in the morning with a full update and we have updated our current trades to reflect today’s action. Subscribers, check for the latest news inside the Members Area.
Tags: AAPL, ADBE, AMZN, AZO, explain the concept of options, momentum options trading, option picks, option trading blog, RIMM
This entry was posted on Tuesday, September 21st, 2010 at 12:31 PM and is filed under Apple, Earnings, Market Analysis, Market Commentary. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.