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Friday, August 20th, 2010
9:00am (EST)
The bulls got a nasty wake-up call yesterday as the bears punished the market and are gathering strength to do some more damage.
The Dow ended Thursday with a loss of 144 points, or 1.4%, to close at 10,271. All 30 stocks that make up the Dow finished in the red as the index touched a low of 10,202. We mentioned support would come in at 10,200 but that level is likely to be taken out today, if not, next week.
The S&P 500 fell 19 points, or 1.7%, to settle at 1,075 and found support right at our 1,070 target. However, it now appears 1,050 will come into play with a possible test down to 1,000 again.
The Nasdaq declined 37 points, or 1.7%, and closed at 2,178. The index touched a low of 2,168 and it appears the next stops will be 2,150 and then 2,050.
As far as today, the market won’t have any economic news to deal with and earnings are light.
Dell (DELL, $12.04, down $0.15) announced after the closing bell on Thursday and told Wall Street they earned $545 million, or $0.28 a share. In the year ago period, Dell earned $472 million, or $0.24 a share. Revenue rose to $15.5 billion, from $12.8 billion, which topped the $15.2 billion analysts had predicted.
Not a bad quarter on the surface, but Dell’s gross profit margins fell and shares are 2% lower in pre-market trading.
Elsewhere, Hewlett-Packard (HPQ, $40.76, down $0.60) reported earnings of $1.8 billion, or $0.75 a share, versus $1.7 billion, or $0.69 a share, a year ago. Excluding items, the company would have earned $1.08 a share which matched analysts’ estimates. Revenue came in slightly ahead of expectations at $30.7 billion, up from $27.6 billion a year ago.
For the full year, HP expects to match the 4.50 a share Wall Street expects, and have revenue of over $125 billion, slightly higher than the $124.9 billion analysts have on the board.
Despite the relatively decent quarters, futures are pointing towards a lower open. Dow futures are down 37 points to 10,198 while the S&P 500 futures are off by 4 points to 1,067. The Nasdaq 100 futures are lower by 5 points, to 1,814.
Of course, we want the market to go lower because we are leveraged to the short side. Many of our current trades should get another pop this morning. Subscribers, check the Members Area for the updates.
Tags: Dell, HPQ, option picks, stock options trading
Posted in Earnings, Market Analysis | Comments Off
Thursday, August 19th, 2010
2:35pm (EST)
Sorry for the late update folks, but, we were watching the charts to see if support was going to hold today and wanted to wait an extra hour or so before sending this out…
The bulls got a double-whammy this morning and had their hopes of any rally off the Intel (INTC, $18.95, down $0.64) news wiped away after a couple of disappointing economic reports whacked the market.
The first one, weekly jobless claims, was another blow to the labor market and showed initial claims for unemployment benefits rose by 12,000 to 500,000 last week. The market had expected a number south of 478,000 and any number below that would have had the bulls on the run. Make that a stampede…
Another blow to the ego came when the Philly Fed manufacturing survey reported a negative 7.7 print for August after a reading of 5.1 last month. Wall Street was expecting the index to rise this month. And finally, the Conference Board reported its index of leading economic indicators rose 0.1% last month after dropping 0.3% in June. The pencil pushers were expecting a gain of 0.2%.
Earnings were a mixed bag once again with some of the Retailers doing better than others.
Gamestop (GME, $19.12, down $1.64) is down 8% after disappointing analysts with its latest quarterly results. The company reported a profit of $40 million, or $0.26 a share, versus $39 million, or $0.26 a share, in the year earlier period. Revenue came in at $1.8 billion matching analyst’s expectations but they missed by a penny and lowered guidance going forward.
The video game industry has not been strong in recent quarters and interest is waning due the lack of big hit, blockbuster games. There have been a few titles out that have done well but you know when Madden ‘11 has already been discounted $10 before the football season starts, sales are struggling. Not a good sign for Electronic Arts (ERTS, $15.88, down $0.45) going forward.
There will be a lot of action after the closing bell today as Aeropostale (ARO, $23.46, down $0.03), Dell (DELL, $12.05, down $0.14), Hewlett-Packard (HPQ, $40.56, down $0.80) and Salesforce.com (CRM, $97.09, down $2.24) will be stepping up to the podium to announce their latest results.
The bulls might be a little depressed today but all of the negative news has been good news for our option trades.
As we head to press, the Dow is off a whopping 171 points, or 1.6%, to 10,246. The S&P is off by 20 points, or 1.9%, and is at 1,073. The Nasdaq is getting punished for a 39 point loss, or 1.8%, and is at 2,176.
Both the S&P 500 and Nasdaq should find support at 1,070 and 2,150 which is why we posted today’s update late. The Dow should find support at 10,200.
These levels have not been violated but the S&P 500 has kissed 1,070. If these levels fail to hold, the selling pressure could intensify going into the close and into Friday. We have updated all of our current trades and we can’t wait to get you inside the Members Area today. Subscribers, check for the updates.
Tags: Dell, GME, GOOG, HPQ, MOT, option picks, RIMM, stock options trading
Posted in Earnings, Economic News, Market Analysis | Comments Off
Wednesday, August 18th, 2010
1:00pm (EST)
It’s another listless day on Wall Street as the market is trading at or near breakeven levels. The bulls appeared to have the slight edge heading into the open but futures failed to hold and the bears took advantage of the weakness. There are a number of earnings reports that showed consumer spending is still shaky and there is no major economic news due out so we aren’t surprised to see a flat day.
Retailers are still showing weakness and the latest big-box reports out of Target (TGT, $51.86, up $1.18) and BJ’s Wholesale (BJ, $41.60, down $1.71) failed to impress analysts.
Target reported a profit of $679 million, or $0.92 share, versus $594 million, or $0.79 a share, in the year-earlier period and matched expectations. Revenue came in at $15.5 billion which was slightly lower than the $15.6 billion Wall Street had predicted.
Shares traded in the red at the opening bell after the company lowered analysts’ forecasts and offered a muted outlook for sales, but, are now trading higher for the session. Target said in its conference call that it expects to offset weak sales with higher grocery sales and new discounts for credit card holders which helped reverse the losses but consumers are still cutting back.
BJ’s reported higher profits and hit expectations but lowered its 2010 profit target to $2.40-$2.50 a share, down from a mid-May forecast of $2.58-2.68 a share.
As we head to press, the Dow is lower by 5 points to 10,400 while the S&P 500 is fractionally higher at 1,093. The Nasdaq is up by 8 points to 2,217.
We have a lot to cover in our Members Area this afternoon and we have a number of trades on our Watch List that look juicy. It is only a matter of time before we start adding these low hanging fruits to our portfolio to replace the recent winners our subscribers have cashed in on. Check out our 2010 Portfolio that has been updated as of yesterday for our recently CLOSED trades. Subscribers, check for the updates!
Tags: BJ, option picks, stock options trading, Target, TGT
Posted in Earnings, Market Analysis | Comments Off
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