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Friday, February 3rd, 2012
9:00am (EST)
The market finished flat on Thursday ahead of this morning’s unemployment numbers with Tech showing strength while the blue-chips slipped.
The Dow fell 11 points to 12,705 while the S&P added a point to end at 1,325. The Nasdaq added 11 points to finish at 2,859 after kissing a high of 2,868.
Before we get into this morning’s action, we wanted to give you an update on Abercrombie & Fitch (ANF, $40.40, down $6.43) which dropped 14% yesterday. We have been watching this stock for over a decade so we know how it trades and we could fell this big breakdown coming which may not be done. This is one of the beauties of trading options because sometimes you can just feel a trade is going to be good and we have targeted a drop below $40 for 2 weeks.
Shares were downgraded on Monday but shares drifted higher throughout the week and we knew we were getting the perfect setup. In fact, as we have been closing trades this week, we had Abercrombie put options at the TOP of our Watch List. The company was expected to announce earnings next week and we have been telling our subscribers that they could report a terrible quarter.
It wasn’t too hard to figure out when some of our research revealed the company has been slashing prices for months and has been losing market share. Plus, with the warm weather, this pick was a no brainer.
Here were our thoughts with stock and option quotes from the Wednesday’s close:
Abercrombie & Fitch (ANF, $46.83, up $0.89)
February 42 puts (ANF120218P00042000, $0.65, down $0.25)
May 37 puts (ANF120519P00037000, $1.10, down $0.30)
Thoughts: We could be getting close for a nice entry point. The company will announce earnings on February 13 and we think it will be a terrible quarter. In fact, they could pre-warn Wall Street and we may open a position by Friday on ANF with one of these options.
There is a chance for a pop to $50 but a move below $42.50 will be our trigger point. However, we may enter early on a drop below $45. (END)
Needless to say, the put options had a monster day. The February 42 puts (ANF120218P00042000, $2.25, up $1.60) were up a whopping 240% and the May 37 puts (ANF120519P00037000, $2.30, up $1.20) easily gained over 100%.
Abercrombie pre-announced results Thursday and said profits were up 16% for the quarter but U.S. sales were up just 4% due to heavy markdowns. Looking ahead, the retailer said it expects profits of $1.10-$1.15 a share for the current 3 months versus the suit-and-ties expectations for $1.54.
Although we missed another golden opportunity yesterday from a trade on our Watch List, Abercrombie could be headed below $30 so we may get another opportunity to short this name. We will be doing some more chart work over the weekend and we will let you know on Monday how things are looking.
The good news is we do have 2 current 100% winners on the books with half-profits already taken in one of them.
As far as this morning’s action, it looks like a green open and our headline says it all.
Dow futures are up 101 points to 12,767 while the S&P 500 futures are higher by 12 points to 1,334. The Nasdaq futures are showing a 24 point pop and are at 2,515.
Subscribers, check the Members Area for the updates and once again, stay on the lookout for Trade Alerts this morning.
Tags: anf, ANF earnings miss, call options, unemployment rate
Posted in Company Commentary, Earnings, Market Analysis | Comments Off
Thursday, February 2nd, 2012
12:45pm (EST)
The bulls continue their quest for new 52-week highs following better-than-expected economic news and a host of good earnings. Initial Claims came in at 367,000 versus expectations for a print of 371,000, while Continuing Claims were 3.43 million versus a forecast for 3.54 million. Elsewhere, Nonfarm Productivity was 0.7% versus expectations for a pop of 0.8%. Finally, Unit Labor Costs were up 1.2% compared to a forecast of a 0.8% increase.
Of course, Wall Street is eagerly awaiting tomorrow’s marquee report on Nonfarm Payrolls which is due out before the bell. Other headlines for Friday will include the latest numbers on Factory Orders and the ISM Services Index.
Green Mountain Coffee Roasters (GMCR, $64.53, up $10.90) and Mastercard (MA, $376.58, up $18.96) are trading higher after announcing better-than-expected earnings while Merck (MRK, $38.10, down $0.53) is trading lower after missing Wall Street’s revenue forecast.
We have been super busy today and we have more action to take on one of current trades. As we head to press, the Dow is down 28 points to 12,688 while the S&P is off a point to 1,323. The Nasdaq is higher by 9 points to 2,857.
Tags: GMCR, MA, mrk
Posted in Company Commentary, Earnings, Market Analysis, Market Commentary | Comments Off
Wednesday, February 1st, 2012
12:30pm (EST)
It is always nice to make 100% on an option trade, especially in 2 weeks, but sometimes the market moves just enough to knock you out of a position that you really feel good about. It is also possible to play a continued run on a stock so it is important to keep it on your Watch List in case shares break to new highs.
We recently did some research work for our Weekly Wrap on Seagate Technology (STX, $25.53, up $4.39) which is soaring today after beating Wall Street’s expectations. The homework led us to a great opportunity as we saw shares were on a roll and the momentum was building. On January 6, 2012 we recommended the February 19 calls (STX120218C00019000, $6.50, up $4.20) at 70 cents and we were out at $1.20 and $1.60 a few weeks later which gave us an average selling price of $1.40, or a double from our entry price.
Here is the chart work we did for the stock:
We took our eye off the prize because our portfolio is pretty full and we missed today’s move although some of our subscribers who use our Watch List are happy campers. Shares had stalled at $20 but here are the trades we have kept on our Watch List since last week and our thoughts this morning (quotes are from yesterday’s close):
Seagate Technology (STX, $21.14, up $0.25)
February 21 calls (STX120218C00021000, $1.05. up $0.05)
March 21 calls (STX120317C00021000, $1.35, up $0.05)
Thoughts: For those of you in this trade, you are going to get paid today after the company came in with above the bar numbers.
We said a pop to $22 would come if $20 is cleared but shares could reach $25 on a blue-sky breakout. (END)
Well, the (STX120218C00021000, $4.50. up $3.45) are up over 300% today and the March 21 calls (STX120317C00021000, $4.65, up $3.30) are up nearly 250%. Obviously, if you are in these trades, lock up profits.
Of course, we can’t take credit for the trades because we didn’t officially release them again but we can take credit for the 100% return in January for the one we did. However, we do feel bad for not following through on our research but we are doing cartwheels for the subscribers who do use the Watch List.
We did close five 100+% winners in January and we are close to bagging a big one. Trust us.
You never know, some of our current trades could take the same path as Seagate Technology.
The bulls are pushing resistance after good news out of China. We are also hearing rumors that Greece is “hours” away from cutting a deal with its private bond holders. We have heard this “wolf” cry before but hopefully the European leaders can get a deal done here soon which will bullish for the market.
Currently, the Dow is up 137 points to 12,770 while the S&P 500 is higher by 15 points to 1,327. The Nasdaq is showing a pop of 33 points to 2,847.
We have some nice pin action on a few trades so let’s go check the tape. Subscribers, hit the Members Area for the updates.
Tags: call options, Seagate technologies, STX, STX earnings
Posted in Earnings, Market Analysis, Market Commentary | Comments Off
Wednesday, February 1st, 2012
9:00am (EST)
After an initial pop at the open, the market matched Monday’s action by testing support and spending the rest of Tuesday’s session trying to get back to even. Following a 3-week rally to start the year, a short-term trading range has developed over the past week-and-a-half which could be decided by Friday. Economic news, and earnings, could help or hinder both the bears and bulls as we continue to wait patiently for a breakout or breakdown.
The Dow declined 21 points, or 0.2%, to close at 12,632. The blue-chips reached a high of 12,720 at the open but also fell to a low 12,567 on the weaker-than-expected economic news.
The S&P 500 slipped a point, or 0.1%, to settle at 1,312. The index traded up to 1,321 within the first 30 minutes of action but had dropped to 1,306 by lunchtime.
The Nasdaq edged higher by 2 points, or 0.1%, to end at 2,814. Tech reached a peak of 2,826 at the start of trading but slipped to a low of 2,798 intraday.
Amazon.com (AMZN, $194.44, up $2.29) announced their numbers after the close last night, but unlike Apple (AAPL, $456.26, up $3.25), they failed to crush Wall Street’s estimates and actually came up a little short.
The company posted a profit of $177 million, or 38 cents a share, on revenue of $17.4 billion. The suit-and-ties were looking for 17 cents a share on sales of $18.25 billion.
Looking ahead, Amazon also came in a little light on their forecast for the current quarter after predicting revenues in a range of $12-$13.4 billion versus expectations for $13.4 billion.
Shares were whacked in after-hours trading last night after dropping $17 to $177, or down 9%. This morning, in pre-market action, shares are at $175, down $19.
As we head to press, Dow futures are up 81 points to 12,658 while the S&P 500 futures are higher by 8 points to 1,316. The Nasdaq futures are off by 11 points to 2,475.
We have a lot to cover this morning, including some chart work for one of our current trades so let’s get on it. Subscribers, check the Members Area for the updates.
Tags: AAPL, AMZN, AMZN earnings
Posted in Apple, Earnings, Market Analysis, Market Commentary | Comments Off
Friday, January 27th, 2012
1:15pm (EST)
We said no Greece deal would weigh on the market this week and perhaps keep the reins on the bulls. If the closing bell sounded right now, the week would end mixed with Tech showing the only positive finish.
The Dow came into the week at 12,720 and is at 12,646, down 88 points.
The S&P 500 started Monday at 1,315 and is currently down 5 points to 1,313.
The Nasdaq began the week at 2,786 and is at 2,808, up 3 points.
Over a quarter of the S&P 500 companies have announced earnings this week and next week marks the height of the season before we start tapering off. Some of the companies we will be watching like a hawk next week include Aflac (AFL, $48.70, down $0.08), Amazon.Com (AMZN, $195.20, up $1.88), Broadcom (BRCM, $35.20, down $0.09) and United Parcel Service (UPS, $75.98, up $0.14) on Tuesday.
Wednesday, Chipotle Mexican Grill (CMG, $364.80, down $1.01), Electronic Arts (EA, $17.91, up $0.25), Green Mountain Coffee Roasters (GMCR, $52.61, up $3.27), Hershey (HSY, $61.37, down $0.16), Las Vegas Sands (LVS, $49.22, up $0.25) and Qualcomm (QCOM, $57.62, down $0.20) will announce their quarterly results.
Thursday and Friday will also feature some companies of interest and these are some of the main stocks we actively follow just to name a dozen or so.
We continue to chuckle when we hear that stock picking is a lost art, which we have heard for the last 3 months. We must be doing something good to hit 17-out-of-18 wininng trades to start the year for our Daily and to go 23-0 over the last 13 months for our Weekly Wrap covered call trade Portfilios.
We have some last minute updates to the 2 new trades we added this morning as we have added our exit targets. Let’s go see where we are at inside the Members Area.
January has been incredibly good to us and we will cover the charts for the indexes and our current trades on Sunday night in our Weekly Wrap and Monday morning for the Daily. We have a busy weekend of homework but it isn’t “work” because we have been banking profits all month long. Until then, have a great weekend everyone!
Tags: AFL, AMZN, CMG, dndn, EA, GMCR, HSY, LVS, QCOM, UPS
Posted in Earnings, Market Analysis, Market Commentary | Comments Off
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Unemployment Rate Falls to 8.3%
Friday, February 3rd, 2012
9:00am (EST)
The market finished flat on Thursday ahead of this morning’s unemployment numbers with Tech showing strength while the blue-chips slipped.
The Dow fell 11 points to 12,705 while the S&P added a point to end at 1,325. The Nasdaq added 11 points to finish at 2,859 after kissing a high of 2,868.
Before we get into this morning’s action, we wanted to give you an update on Abercrombie & Fitch (ANF, $40.40, down $6.43) which dropped 14% yesterday. We have been watching this stock for over a decade so we know how it trades and we could fell this big breakdown coming which may not be done. This is one of the beauties of trading options because sometimes you can just feel a trade is going to be good and we have targeted a drop below $40 for 2 weeks.
Shares were downgraded on Monday but shares drifted higher throughout the week and we knew we were getting the perfect setup. In fact, as we have been closing trades this week, we had Abercrombie put options at the TOP of our Watch List. The company was expected to announce earnings next week and we have been telling our subscribers that they could report a terrible quarter.
It wasn’t too hard to figure out when some of our research revealed the company has been slashing prices for months and has been losing market share. Plus, with the warm weather, this pick was a no brainer.
Here were our thoughts with stock and option quotes from the Wednesday’s close:
Abercrombie & Fitch (ANF, $46.83, up $0.89)
February 42 puts (ANF120218P00042000, $0.65, down $0.25)
May 37 puts (ANF120519P00037000, $1.10, down $0.30)
Thoughts: We could be getting close for a nice entry point. The company will announce earnings on February 13 and we think it will be a terrible quarter. In fact, they could pre-warn Wall Street and we may open a position by Friday on ANF with one of these options.
There is a chance for a pop to $50 but a move below $42.50 will be our trigger point. However, we may enter early on a drop below $45. (END)
Needless to say, the put options had a monster day. The February 42 puts (ANF120218P00042000, $2.25, up $1.60) were up a whopping 240% and the May 37 puts (ANF120519P00037000, $2.30, up $1.20) easily gained over 100%.
Abercrombie pre-announced results Thursday and said profits were up 16% for the quarter but U.S. sales were up just 4% due to heavy markdowns. Looking ahead, the retailer said it expects profits of $1.10-$1.15 a share for the current 3 months versus the suit-and-ties expectations for $1.54.
Although we missed another golden opportunity yesterday from a trade on our Watch List, Abercrombie could be headed below $30 so we may get another opportunity to short this name. We will be doing some more chart work over the weekend and we will let you know on Monday how things are looking.
The good news is we do have 2 current 100% winners on the books with half-profits already taken in one of them.
As far as this morning’s action, it looks like a green open and our headline says it all.
Dow futures are up 101 points to 12,767 while the S&P 500 futures are higher by 12 points to 1,334. The Nasdaq futures are showing a 24 point pop and are at 2,515.
Subscribers, check the Members Area for the updates and once again, stay on the lookout for Trade Alerts this morning.
Tags: anf, ANF earnings miss, call options, unemployment rate
Posted in Company Commentary, Earnings, Market Analysis | Comments Off