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10:40pm (EST)
The bulls were off and running on Friday as the Dow opened with a triple-digit gain after Wall Street learned the unemployment rate fell to 10% in November from 10.2% in October before the bell. Most of the suit and ties figured the jobless rate would remain at 10.2% but a positive nonfarm payrolls report offered clues on Thursday.
The market also got a better than expected factory orders report 30 minutes after the open but before lunch the bulls were packing it up and heading out for the weekend. The markets then fluctuated the rest of the day on the strengthening U.S. dollar but still managed to finish the day and week higher.
The Dow was up 22 points to 10,388 and finished the week with a slight 0.8% increase. Not bad for five days worth of work but the Nasdaq carried the load as it settled at 2,194, up 21 for the day, and 2.6% for the week. The S&P 500 gained 6 to 1,105 and added 1.3%, respectively.
As you can imagine, some stocks rallied off the “good” unemployment report. Manpower (MAN, $56.77, up $5.39) soared 10% and hit a high of $58, Monster Worldwide (MWW, $16.83, up $1.80) popped 12% and Robert Half International (RHI, $25.74, up $2.56) jumped 11%.
Big Lots (BIG, $28.08, up $4.54) had a BIG Friday as shares zoomed nearly 20% after the national closeout retailer announced 3Q profits that more than doubled Wall Street’s expectations. The company earned $30 million, or $0.37 a share, compared with $12 million, or $0.15 a share, a year earlier. Wow. We were eyeballing this one in the Weekly Wrap last Sunday as an “earnings play” but felt nervous on recommending this one after our Aeropostale (ARO, $28.95, flat) debacle.
We should have stuck with our game plan as the Big Lots December 25 calls (BIGLE, $3.10, up $2.50) gained over 400% on Friday. Want one better? The BIG December 27.50 calls (BIGLY, $1.10, up $1.00) were up an astounding 1,000%! Now you know why we like earnings trades…
Elsewhere, Bank of America (BAC, $16.28, up $0.52) added 3% after it announced plans to repay $45 billion in TARP funds as it looks to find a new CEO. Hard to believe this stock was at $3 in March. We made some great option trades on the stock’s climb back to $20 which is where it ran out of gas back in October. We aren’t ready to jump back into this one but we are watching the developments.
Gold has a wild week and hit a record high of $1226 per ounce, but ended the week at $1161/ oz. after plunging $52 on Friday. We were preaching that the gold bugs were getting ahead of themselves last Wednesday when we heard “Gold $5,000″.
We don’t think the rally in gold is over but it only took two days after that retarded call for gold stocks to plunge. Barrick Gold (ABX, $42.68, down $4.16) fell 9%, Newmont Mining (NEM, $52.05, down $2.43) dropped nearly 5% and Goldcorp (GG, $42.27, down $2.88) sank 6%. Also, Freeport-McMoRan (FCX, $79.87, down $3.93), a play on copper and gold, slipped 4.7%.
Crude oil closed down $1 to $75 while natural gas gained 13 cents to $4.59.
We will be back in the morning with the companies reporting earnings this week and the current trade updates.
Bulls Looking To Rebound
Wednesday, June 2nd, 2010
9:05am (EST)
It has become a familiar pattern for the bears these days to let the bulls think they are doing something before knocking them out with a left hook before the closing bell.
Tuesday’s session started off in negative territory as futures were already pointing towards a lower open. The Dow started off with nearly a triple-digit loss before rebounding shortly after the open on encouraging economic news.
The bulls rallied back but couldn’t hold those gains as trading turned choppy for the rest of the session. Momentum tilted back in the bears favor after a government bigwig said they were starting criminal and civil probes into the Gulf of Mexico oil spill shortly before the closing bell. Our Attorney General did not mention which companies or people might be under investigation but we can already picture the lineup.
As a result, the market took another beating with the Dow threatening to fall below the 10,000 level once again. On Tuesday, the index finished with a loss of 113 points, or 1.1%, to finish at 10,024.
The S&P 500 gave back 19 points, or 1.7%, to settle at 1,070 and below the 1,075 level. If the index trades below 1,050 again we could really start to see some selling pressure.
The Nasdaq was down by 35 points, or 1.5%, and settled at 2,222. Dueces may be wild but we think 2,000 is in the cards.
Energy stocks took the brunt of the blows. BP (BP, $36.52, down $6.43) fell to a fresh 52-week low after tanking 15% and Anadarko Petroleum (APC, $42.10, down $10.23), which had their fingers in BP’s oil pie, nearly hit a yearly low after getting a 20% haircut.
Halliburton (HAL, $21.15, down $3.68) dropped 15% in sympathy and Exxon Mobil (XOM, $59.25, down $1.21) slipped 2% and back below $60 a share.
The euro slipped to a low as $1.2112, its lowest level in over 4 years, before climbing back a little. The euro has been a thorn in the market’s side for weeks now but the currency appears to be headed below $1.20 in our opinion.
As we head to press this morning, futures are showing a slightly higher open. The Dow futures are up 29 points to 10,048 while the S&P 500 futures are higher by 4 to 1,073. The Nasdaq 100 futures are showing a 12 point pop.
We added 2 new trades yesterday that got off to a good start and we are looking to add a few more. Subscribers, check the Members Area for the updates.
Tags: APC, BP, Halliburton, option picks, option signals, options alerts, stock options trading
Posted in Commodities, Market Analysis, Market Commentary | Comments Off