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Tuesday, May 22nd, 2012
1:05pm (EST)
The bulls are working on a 2-session win streak as they look to push the next layer of resistance. After a solid start the major averages have come off their highs but are still showing solid gains. While overseas news has been light, we did notice Fitch’s downgrade on Japan’s credit rating which reflected growing risks for Japan’s sovereign debt. Add another one to the growing list.
As far as economic news here at home, the National Association of Realtors reported Existing Home Sales rose 3.4% in April to 4.62 million versus estimates for an increase to 4.61 million. On the negative side, the Richmond Fed Manufacturing Index came in at 4 versus expectations for a print of 11.
Major earnings announcements are winding down as we look ahead to July and the next cycle but Best Buy (BBY, $18.54, up $0.37) reported their results today. The company managed to beat Wall Street’s expectations but there was nothing good about their quarter. Same-store Sales fell over 5% and revenues were lower in Europe and China.
Although shares are getting a pop, they did dip below $18 and the 52-week low is at $17.53. We said there was a chance shares could touch $20 on better-than-expected results but we have a summer-time target of $15 or worse for the stock.
We added 2 new trades this morning as we were able to get in at or below our limit prices. These trades will be short in nature as we explain in the Members Area but we are still targeting at least 50% gains in two weeks or less for both recommendations.
As we head to press, the Dow is up 49 points to 12,553 while the S&P is showing a gain of 8 points and is at 1,324. The Nasdaq is advancing 10 points to 2,857.
Tags: BBY, Best Buy Earnings, market support and resistance
Posted in Earnings | Comments Off
Tuesday, May 15th, 2012
12:40pm (EST)
Futures were soaring last night before we hit the rack and were showing a strong open on Wall Street this morning. Much of the fluff was on early word Greece would be able to put together a coalition government so they could hold a new elections. However, as their day wore on, the country’s political leaders failed to find agreement which put pressure on the U.S. markets as futures were flat ahead of the bell. Imagine that.
Here at home, the Empire State Manufacturing Index came in at 17.1 for May, up from 6.6 in April while Business Inventories increased 0.3%.
Tomorrow is a busy day for economic news with Housing Starts, Building Permits, Industrial Production and Capacity Utilization all being released an hour before the open. They will take a back seat to the FOMC minutes which are due out at 2pm.
Earnings for Wednesday include:
Abercrombie & Fitch (ANF, $45.86, down $0.05), Deere (DE, $77.47, up $0.14), Jack in the Box (JACK, $22.59, up $0.25), Limited Brands (LTD, $48.71, up $0.71), NetEase (NTES, $56.89, up $0.63), Red Robin Gourmet Burgers (RRGB, $35.25, up $0.38), Staples (SPLS, $14.93, down $0.16) and Target (TGT, $55.36, up $0.44)
Parting Shot: We haven’t commented on JPMorgan Chase (JPM, $37.18, up $1.39) too much because we don’t think the $2 billion and counting the company lost will be a huge hit to earnings this year. Sure, the loss stings and tarnished one of the better CEO names in the business but the press and Congress is making this a far bigger deal than need be.
President Obama said on The View that this is “exactly why Wall Street reform is so important” and that Washington might have had to step in if this was a smaller bank.
Give us a break. That is the problem with our country. Let companies take risk and if they fail, they go bankrupt if they can’t cover the losses. JPMorgan had a portfolio of about $400 billion in bonds that they wanted to hedge and they went into the credit default swap market to do so. This would have allowed the company to profit if the bonds went the other way but the market figured this out.
Had JPMorgan’s bets paid off and they made $2 billion, we wouldn’t be having this conversation right now. The problem was the market saw what JPMorgan was doing and everyone bet against them. Had they taken smaller positions and gone unnoticed in their swap dealings, this would be a totally different story.
BTW, JPMorgan is expected to make $18 billion this year – the highest profit ever earned by an American bank. The dividend is safe and the company will make money this quarter.
Our question is this, who is going to “step in” and stop our government from spending? We are approaching $16 trillion in debt which averages out to $50,000 in debt per U.S. citizen. Check it out:
http://USdebtclock.org
That’s all we have for today. As we head to press, the Dow is up double-nickels (55 points) to 12,750 while the S&P is higher by 5 points to 1,344. The Nasdaq is showing a 25 point pop and is at 2,927.
Subscribers, check the Members Area for the important trade updates.
Tags: anf, JPM call options, JPMorgan Chase (JPM), TGT earnings, US debt clock
Posted in Earnings, Market Analysis, Market Commentary | Comments Off
Thursday, May 10th, 2012
9:00am (EST)
The bulls were behind the 8-ball again on Wednesday as the bears pushed March lows at the open. The rebound came on word Greece would get its latest schedule debt bailout which gave the bulls energy. We won’t waste our words on geopolitical news this morning but the end result was a lower high and a lower low for the market which is bearish.
The Dow fell 97 points, or 0.8%, to close at 12,835. The blue-chips traded to a low of 12,748 (-184 points) but recovered half their losses to finish above support at 12,800.
The S&P 500 fell 9 points, or 0.7%, to settle at 1,354. The index kissed a low of 1,343 which opens the door for a test down to 1,325-1,300. The selling pressure will pick up steam on a drop under 1,340 if support at 1,350 is tested again today.
The Nasdaq gave back a 12-pack, or 0.4%, to end at 2,934. Tech once again traded down to exactly 2,900 and could see an accelerated sell-off down to 2,850-2,800 if the bears can get under this level.
The Russell 2000 slipped 4 points and closed at 788 but touched a low of 781. Meanwhile, the S&P 500 Volatility Index (VIX, 20.08, up 1.03) closed above 20 and was up 5% for the session after reaching a peak of 21.59. A move above 22.5 could cause chaos.
Cisco Systems (CSCO, $18.78, up $0.07) reported earnings after the bell last night and beat Wall Street’s estimates, but as we have seen with a number of other companies, Cisco guided lower for the coming quarter. Shares were down 9% in extended trading and were at $17.
We have added 4 charts this morning. Two are for the Dow and S&P, the other 2 charts are for our NEW TRADES we are trying to get into at the open.
As we head to press, futures look like this: Dow (+40), S&P 500 (+9), Nasdaq 100 (+11).
Subscribers, please use limit orders to get the best fills.
Tags: Cisco System earnings, CSCO earnings, Option Trades, VIX
Posted in Earnings, VIX | Comments Off
Tuesday, May 8th, 2012
1:05pm (EST)
The market is doing what it should have done yesterday but we didn’t mind waiting 24 hours as we have been able to close a plethora of winning put option trades today. We will keep it short but we wanted to show you the Fossil (FOSL, $79.66. down $46.11) put option trades we profiled in our Members Area along with the chart work.
Here were our thoughts Monday morning before the market opened (quotes are from Friday, May 4 close):
Fossil (FOSL, $129.19, down $5.81)
May 105 puts (FOSL120519P00105000, $0.90, up $0.60)
June 100 puts (FOSL120616P00100000, $1.10, up $0.50)
Thoughts: Fossil reports earnings on Tuesday so we may get into this trade today but want to see how shares open. The company has been on a roll of late but if they miss earnings or lower guidance look out below.
Here is how the trade looks today on our Watch List:
May 105 puts (FOSL120519P00105000, $25.20, up $24.00)
June 100 puts (FOSL120616P00100000, $22.00, up $20.40)
The May 105 puts are up a staggering 2,000% while the June 100 puts are up a whopping 1,275%!
Here is one of the several dozen emails we got this morning:
“Rick,
Great call on Fossil. I bought the May 120 puts for $3.70 yesterday morning just sold for $32.00 today.
Keep up the great work
Thank you,
Henri N.” (END)
Folks, we said back in late March when we started loading up on put option trades it would be a great time to be IN the market.
We have closed 5 winners this week and we are looking for more.
As we head to press, the Dow is down 170 points to 12,837 while the S&P 500 is lower by 19 points to 1,350. The Nasdaq is off 48 points to 2,910.
Subscribers, check the Members Area for the juicy updates!
Tags: FOSL put options, Fossil earnings miss
Posted in Earnings, Hot Stocks, Market Analysis, Market Commentary | Comments Off
Thursday, May 3rd, 2012
1:20pm (EST)
The market has traded in a tight range all week but with today’s losses, the bears are now winning the week. Economic news has been mixed with jobless claims coming in better-than-expected.
Initial Claims fell 27,000 to 365,000 versus expectations for a print of 379,000. Continuing Claims fell 53,000 to 3.27 million compared to a forecast for 3.3 million claims. Non-farm Productivity decreased 0.5% in the first quarter which was better than calls for a 0.6% decline while Unit Labor Costs were up 2.0% versus expectations for an increase of 2.7%.
Futures got a pop on the news and were up before the open but started to slide as we headed to press this morning. After a flat open, the bears got some good news as the ISM Service Report came in at 53.5 which was below the suit-and-ties forecast for a reading of 55.3.
While we too are focused on Friday, we did take a victory lap around the office as we nailed our biggest trade of the year so far. Two weeks ago we recommended a put option trade on Green Mountain Coffee Roasters (GMCR, $26.27, down $23.25) that we felt had a really good chance of doubling. That was an understatement.
We have been following the company for years and when we first profiled the trade, we talked about the last two times the company had reported earnings. Here is the chart work we showed our subscribers on why we felt this would be a homerun trade as we had a good feeling the company would miss expectations this time around.
The chart work from this morning showed a drop to $25 was possible and today’s low has been $24.40. We recommended the May 35 puts (GMCR120519P00035000, $8.25, up $7.85) at 85 cents on April 17th and they have traded to a high of $10.60 today.
Shares did trade above $30 for about a minute so we closed the trade as we stuck to our trading plan. Although we left a little on the table, our near-term target has been hit and the options expire in two weeks.
We were able to turn $850 into $5,750 for a 576% gain but some of our subscribers have gotten out at higher prices. Awesome!
This was our second big earnings trade in less than a week that has made us some monster profits. Last week, we closed a Deckers Outdoor (DECK, $54.08, down $0.93) put option trade for a 180% win!
The good news is we could have two more trades that could be just as powerful. One more this week, one next week.
As we head to press, the Dow is down 40 points to 13,228 while the S&P is off 7 points to 1,395. The Nasdaq is lower by 26 points to 3,033.
Subscribers, check the Members Area for the updates and get ready for Friday!
Tags: DECK, Deckers Outdoor, Green Mountain Coffee Roasters (GMCR), momentum options, Momentum stocks
Posted in Earnings, Hot Stocks, Market Analysis, Market Commentary | Comments Off
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JPMorgan Chase (JPM) Rebounds
Tuesday, May 15th, 2012
12:40pm (EST)
Futures were soaring last night before we hit the rack and were showing a strong open on Wall Street this morning. Much of the fluff was on early word Greece would be able to put together a coalition government so they could hold a new elections. However, as their day wore on, the country’s political leaders failed to find agreement which put pressure on the U.S. markets as futures were flat ahead of the bell. Imagine that.
Here at home, the Empire State Manufacturing Index came in at 17.1 for May, up from 6.6 in April while Business Inventories increased 0.3%.
Tomorrow is a busy day for economic news with Housing Starts, Building Permits, Industrial Production and Capacity Utilization all being released an hour before the open. They will take a back seat to the FOMC minutes which are due out at 2pm.
Earnings for Wednesday include:
Abercrombie & Fitch (ANF, $45.86, down $0.05), Deere (DE, $77.47, up $0.14), Jack in the Box (JACK, $22.59, up $0.25), Limited Brands (LTD, $48.71, up $0.71), NetEase (NTES, $56.89, up $0.63), Red Robin Gourmet Burgers (RRGB, $35.25, up $0.38), Staples (SPLS, $14.93, down $0.16) and Target (TGT, $55.36, up $0.44)
Parting Shot: We haven’t commented on JPMorgan Chase (JPM, $37.18, up $1.39) too much because we don’t think the $2 billion and counting the company lost will be a huge hit to earnings this year. Sure, the loss stings and tarnished one of the better CEO names in the business but the press and Congress is making this a far bigger deal than need be.
President Obama said on The View that this is “exactly why Wall Street reform is so important” and that Washington might have had to step in if this was a smaller bank.
Give us a break. That is the problem with our country. Let companies take risk and if they fail, they go bankrupt if they can’t cover the losses. JPMorgan had a portfolio of about $400 billion in bonds that they wanted to hedge and they went into the credit default swap market to do so. This would have allowed the company to profit if the bonds went the other way but the market figured this out.
Had JPMorgan’s bets paid off and they made $2 billion, we wouldn’t be having this conversation right now. The problem was the market saw what JPMorgan was doing and everyone bet against them. Had they taken smaller positions and gone unnoticed in their swap dealings, this would be a totally different story.
BTW, JPMorgan is expected to make $18 billion this year – the highest profit ever earned by an American bank. The dividend is safe and the company will make money this quarter.
Our question is this, who is going to “step in” and stop our government from spending? We are approaching $16 trillion in debt which averages out to $50,000 in debt per U.S. citizen. Check it out:
http://USdebtclock.org
That’s all we have for today. As we head to press, the Dow is up double-nickels (55 points) to 12,750 while the S&P is higher by 5 points to 1,344. The Nasdaq is showing a 25 point pop and is at 2,927.
Subscribers, check the Members Area for the important trade updates.
Tags: anf, JPM call options, JPMorgan Chase (JPM), TGT earnings, US debt clock
Posted in Earnings, Market Analysis, Market Commentary | Comments Off