MomentumOptionsTrading.com Midday Update for 7/16/2014
Intel (INTC) Beats/ Yahoo (YHOO) Disappoints/ New Trade!!!
Futures were showing a strong open heading into Wall Street’s open following some good news from the Tech sector.
Intel (INTC, $34.01, up $2.30) got the ball rolling following Tuesday’s close after announcing better-than-expected earnings. The company reported a profit of $0.55 a share on revenue of $13.8 billion. The suit-and-ties were looking for $0.52 a share on revenue of $13.7 billion.
Yahoo (YHOO, $33.97, down $1.64) shares are trading lower after the company missed Wall Street’s estimates by a penny and revenue by $400 million as ad revenue dropped. Analysts were looking for $0.38 a share on sales of $1.08 billion.
While disappointing, the bigger story with Yahoo is their stake in the upcoming Alibaba (BABA) IPO. The Initial Public Offering is slated for August and Yahoo owns roughly 25% of the Chinese internet company.
I thought it was good news Yahoo was allowed to lower the number of shares they are selling in the IPO to 140 million shares, down from 208 million. This shows that while Yahoo will make a mint on the IPO (as Alibaba could become the biggest Tech IPO ever) it also also keeping a larger investment and longer-term faith in the company.
The news I was really excited about was the collaboration between Apple (AAPL, 96.16, up $0.84) and International Business Machines (IBM, $193.20, up $4.71). The two behemoths will team up to better serve the corporate world and enhance the mobile experience. The news had a nasty effect on shares of Blackberry (BBRY, $10.25, down $1.05).
The tone and run to fresh highs are bullish signs but there are a number of major earnings reports still due out this week and July option expiration is on Friday. These events will continue to produce fresh highs or a possible topping formation so I am paying close attention to everything this week.
The Dow is up 63 points to 17,123 with IBM accounting for half the move. The S&P 500 is higher by 7 points to 1,980. The Nasdaq is gaining 18 points to 4,434 and the Russell 2000 is advancing a point to 1,154 but has struggled for much of the first half. The VIX is back below 11.50 to 11.31, down 0.65.
I have a New Trade for today on a company with declining earnings and a nasty looking stock chart. Shares are trading near $55 but I am expecting a drop to $45 over the next 3 months. If I’m right, the put options I am recommending could return over 350%.
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