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Friday, October 30th, 2009
9:15am (EST)
The market rebounded in strong fashion yesterday as the bulls pushed the Dow higher by 200 points and back near the 10,000 level. The index finished at 9,962 after a better-than-expected 3Q GDP (gross domestic product) number and we have mentioned the current battle taking place over Dow 10,000. GDP surged to an annualized growth rate of 3.5% which was better than the expected increase of 3.2%.
The rally was impressive but the bears still have a slight edge for the week. We have been talking about market volatility and we are clearly seeing evidence of that this week. One bit of negative news that was lost in the shuffle yesterday was the initial jobless claims number which totaled 530,000. This was slightly more than the 525,000 initial claims that were widely expected. The increase may not look like a big deal but it is still a pretty bad number…
We wanted to spend some time picking on Wall Street’s analysts this morning because some of the upgrades/ downgrades they make are puzzling. There were a couple of classic examples of an analyst showing up late to the party or your left wondering and scratching your head on some of these calls.
Let’s start with this one…
One brokerage firm downgraded First Solar (FSLR, $126.47, down $25.11) from Outperform to Neutral yesterday and cut its price target from $170 to $120. They went on to say, “We are downgrading First Solar to Neutral based on declining margin profile.”
As you know, the company missed on its revenue numbers when they reported earnings but we had our subscribers in the trade before the fact. So if it gets to $120 do they come out with a Buy rating and a price target of $170?
We profiled some put options on First Solar on Tuesday and many our subscribers made some incredible returns. The options were at $1.00 when we profiled the trade in our Members Area and zoomed to a high of $3.99 on Thursday. We had a feeling that the company could come in light on revenues and many of you were brave enough to go short by using the puts.
Here is another one…
Piper Jaffray downgraded Activision Blizzard (ATVI, $11.09, down $0.30) to Neutral and lowered its price target from $13 to $12. Geez, the stock has been stuck in a range of $11-$13 for six months!
We wanted to “pick on the Piper” today because they also came out with a Buy rating on Imax (IMAX, $10.78, up $0.99). We were recently stopped out of an Imax trade that we profiled in August and at one point we were up over 75%. A breakdown in the stock had been going on since Monday before yesterday’s upgrade. We were stopped out for a 10% gain but we wish the Piper would have piped before the stock dipped below $10…
We love watching the upgrades and downgrades that hit the tape and they can cause huge price swings in stocks. However, sometimes these analysts crack us up…
We have had an incredible week with our trade picks as we have closed two triple-digit winners for the portfolio. We also have stops in place to protect another 100% return and we are excited as we head into November and the rest of the year. We expect the volatility to remain and hopefully it gets even more volatile. Remember, we aren’t bullish or bearish, we are BOTH.
Current subscribers, please check the Members Area for the updates.
Tags: First Solar, momentum options, MomentumOptionsTrading.com, options help, options mentoring, options track record, options trading, trading options
Posted in Commodities, Entertainment Stocks, Hot Stocks, Market Analysis, Trading Psychology | Comments Off
Monday, October 5th, 2009
3:00pm (EST)
The bulls got the ball rolling today after a positive ISM number this morning has put Wall Street in a buying mood. The Institute for Supply Management said its service index rose to 50.9 in September from 48.4 in August. The Street had expected a reading of 50, and anything over that is considered growth. Below 50 is considered contraction.
The rally has also been fueled by positive comments on the Financial stocks as Goldman Sachs (GS, $185.16, up $5.55) upgraded the large banks. Bank of America (BAC, $16.81, up $0.47) is up 3% and is looking attractive at $16-$17. This is easily a $25 stock by early 2010.
As a result, the Dow is currently up 136 points to 9,623 while the S & P 500 is up 17 to 1,042. The Nasdaq is up 26 points to 2,074.
Exxon Mobil (XOM, $67.62, up $1.04) was looking good at $66 on Friday and I have mentioned this support area several times over the last few weeks. Oil took a hit last week but has gained 76 cents to $70.71 today. Some are calling for oil to dip to the high $50′s while others are expecting a run to $85-$90 over the short-term. I’m not sure if there is an option trade on XOM just yet but it is getting interesting and I would expect shares to make a run back to $70 over the next couple of weeks.
Research In Motion (RIMM, $65.87, up $0.45) also looks like it has bottomed and has traded as high as $67.74 today. I think there is a trade on this one but I’m not quite ready to pull the trigger. RIMM was on our radar Friday but the waters were too muddy for us to make a play. However, I may add some insurance to the trade which is why we are holding off.
One trade we did take today was Pepsico (PEP, $60.79, down $0.11) and we got some great entry prices by waiting until after the market opened. Our other trades in Abercrombie & Fitch (ANF, $30.40, down $0.22), Citigroup (C, $4.64, up $0.12) and Imax (IMAX, $9.60, up $0.30) are also heading in the right directions today.
I will be back in the morning with the complete updates and we will be back on regular schedule on Tuesday. Subscribers, if you have not read the Pepsico trade for today, you can check the Members Area for this morning’s update.
Rick@MomentumOptionsTrading.com
Tags: momentum options trading, Momentum stocks, option trade picks, options blog, options mentoring, options track record
Posted in Company Commentary, Earnings, Entertainment Stocks, Financial Stocks, Market Analysis, Oil, Option Trades | Comments Off
Sunday, October 4th, 2009
3:45pm (EST)
Special Note: We are sending today’s Weekly Wrap early. I am away on travel and hope to be back in the office by Monday morning. In case I’m not, this is Monday Morning’s Update. There is a NEW TRADE for Monday morning, Pepsico (PEP, $60.90, up $2.44), that is profiled in the Members Area. Our latest trade, Abercrombie & Fitch (ANF, $30.62, down $1.08) is up 50% in less than a week and we are hoping for the same returns, if not more, for the Pepsico trade. To read the latest update on all of our trades you must be a premium member which gives you full access to our Members Area. Our last closing trade in Nike (NKE, $62.02, down $0.48) netted our subscribers profits of up to 200%….
Market Commentary
It was no bull and all bear last week as the market fell 2% on average. Friday was setting up to be an explosive day as the Dow futures were down over 100 BEFORE the opening bell rang. However, the drop was marginal and although the bulls lost the week, Friday’s battle was a huge victory. The fact that the Dow lost only 20 points is clear indication the bulls aren’t going anywhere.
For the week, the Dow lost 177 points, or 1.8%, and closed at 9,487. The Nasdaq finished the week at 2,048, down 43 points, or 2%. The S&P 500 dropped 19 points, or 1.8%, and settled at 1,025.
The market was hit with a bunch of disappointing economic news and Friday’s unemployment report was suppose to be a canon ball going through paper for the bears. The fact that the bulls held their ground gives further indication there are buyers on the sidelines. It doesn’t matter if the market is overvalued or undervalued, it never does.
The market doesn’t care about our personal wins and losses and although we may be overbought at these levels you can’t deny the action and aggressiveness of the bulls since the March lows. The thing Wall Street forgets to realize is that the market came down from a much higher level as the Dow was standing at 14,000 in 2007…
A 50% drop in the Dow which is where we were in March when the Dow was at 6,500 would mean over a 100% return to get back to the 14,000 level. We certainly know that isn’t going to happen this year but I think it is important for us to remember where we came from. So I don’t buy into that “we have come too far, too fast” spit that we have been hearing. Those same pundits were calling for a “bounce” BEFORE we bottomed at 6,500 because they couldn’t believe the sell-off. Now it’s the opposite.
Third-quarter earnings should give us a better sense of whether companies managed to grow their revenues to produce earnings growth or if we see continued cost-cutting. This helped with 2Q earnings but the same theme might not work this time around.
The bears got a “little taste” of the bulls last week so you know they aren’t going anywhere either. We are still in a volatile, nervous market which means we could get some really big moves in October.
As we head to press, the Dow futures are down 36, S&P 500 futures are off by 6 while the Nasdaq 100 futures are lower by 8. Of course, the overseas markets will affect those numbers and things could change by Monday morning but it appears we could start the week slightly lower.
Subscribers don’t forget to check the Members Area for the latest trade and updates. The update is posted under the Monday, October 5th link.
Earnings
Monday: Mosaic (MOS, $46.18, down $0.25), Robbins & Myers (RBN, $22.60, down $0.41), RPM International (RPM, $18.08, up $0.20) and Team (T, $16.77, down $0.03).
Tuesday: AngioDynamics (ANGO, $13.80, up $0.05), Chattem (CHTT, $64.59, down $0.31), Pepsi Bottling Group (PBG, $37.25, up $0.76) and Yum! Brands (YUM, $33.15, up $0.02).
Wednesday: Acuity Brands (AYI, $30.98, down $0.18), Alcoa (AA, $12.82, down $0.10), Costco Wholesale (COST, $56.47, up $0.78), Family Dollar (FDO, $26.63, down $0.21), Helen of Troy (HELE, $18.83, up $0.13), Monsanto (MON, $74.93, down $0.18), Ruby Tuesday (RT, $7.89, up $0.13) and Wolverine World Wide (WWW, $24.14, down $0.07).
Thursday: International Speedway (ISCA, $27.09, down $0.16), Marriott International (MAR, $25.61, down $0.75) and Pepsico (PEP, $60.90, up $2.44).
Friday: Cantel Medical (CMN, $15.29, up $0.15) and Infosys Technologies (INFY, $47.85, up $0.60).
Rick@MomentumOptionsTrading.com
Tags: anf, momentum options trades, momentum stock picks, Nike, NKE, option blog, option trading picks, options mentoring, options trading, PEP, PepsiCo
Posted in Company Commentary, Economic News, Entertainment Stocks, Financial Stocks, Market Analysis, Market Commentary, Option Trades, Sectors, Stock Earnings, Strategies, Watch Lists | Comments Off
Friday, September 11th, 2009
9:00am (EST)
The bulls made it five in-a-row on Thursday and will look to extend their winning streak to a half dozen today. We got a couple of nuggets that turned out to be golden for the market that helped push us higher A lower-than expected jobless claims report was welcomed news and Procter & Gamble (PG, $56.04, up $2.28) jumped 4% after it said it expects stronger sales.
The Dow Jones added 80 points on Thursday to close at 9,627. The index is now at its highest level since October but still down from its 1-year ago high of 11,523. The close above 9,625 was significant because it could represent “breakout” territory. There is virtually no resistance between here and 11,500.
The S&P 500 gained 11 points and finished at 1,044. The bulls are eyeing the 1,100-1,150 area. The Nasdaq closed at 2,084, up 24 points, or 1.2%. If it can get thru 2,100 then we could easily see the Nasdaq push 2,200.
The Labor Department’s reported that jobless claims fell more than expected to 550,000 last week and we will need unemployment figures to continue to improve if we are going to challenge those highs. However, we could still hit double-digits on unemployment and trade higher.
Everybody has been waiting for the pullback but we have still been leaning towards mostly bullish trades. You have to trade what you are seeing on the tape and when the bears failed to show up last Friday, you could kind of feel the bulls bidding the market higher that day. As everyone keeps calling for a pullback the market is proving that the herd is often wrong. This is why you have to tune out what the talking heads are saying and watch the tape and the sector rotations. From this camp, I’m looking for a continued move higher until some newsworthy event, some major bad news, before the bears come out to play.
Real quick…
Welcome Tri-Tech (TRIT, $8.75, up $2.00) to the investing community. The Chinese company had its Initial Public Offering (IPO) yesterday after pricing 1.7 million shares at $6.75 apiece. Tri-Tech’s forte is designing and customizing sewage treatment and control systems in China but it is a tiny company. The stock can be added to your “China Watch List” but there are no options (yet) on the stock.
JDS Uniphase (JDSU, $7.60, up $0.23) tacked on 3% yesterday and the September 7 calls (UQDIJ, $0.65, up $0.20) continue higher. Here is where those cheap-in-the-money kick into high gear. I didn’t recommend getting back in the trade but we have subscribers who took the trade back in June. In fact, some subscribers got in at the 20 cent level. If you are still in, close at least 75% of the trade by the closing bell.
Subscribers, don’t forget to check the Members Area for the trade updates.
Rick@MomentumOptionsTrading.com
Posted in Company Commentary, Entertainment Stocks, Financial Stocks, Hot Stocks, Market Analysis, Market Commentary, Option Trades | Comments Off
Monday, September 7th, 2009
11:00pm (EST)
1. Commentary
2. Imax Could Be A Wildcard
3. Earnings
4. Current Trades
5. Closing Thoughts
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1. Commentary
The market was on pins and needles all week as all eyes were on “the number” before the bell on Friday. It was a choppy week that started off with a thud as the Financial stocks took a beating after rumors of a big bank failure was making the rounds.
Wells Fargo (WFC, $26.91) squelched murmurs of a dilutive secondary offering which has been going around for weeks as the company said it intendeds to repay the TARP funds it borrowed without raising equity.
Of course, a weaker-than-expected unemployment rate of 9.7% made the print on Friday as Wall Street had expected 9.5%. Despite the not so shocking news, the market trended higher on Friday but finished lower for the week.
Overall, the Dow lost 103 points to finish the week at 9,441. The Nasdaq fell 10 and stands at 2,018 while the S&P 500 gave back 12 points and closed at 1,016.
I’ve got a lot I want to talk about so let’s move on after enjoying this Holiday weekend…
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2. Imax Could Be A Wildcard
Folks, I am really starting to like Imax (IMAX, $9.30, up $0.12). This piece is from the December 8th, 2008 Blog:
“I’m not all that excited about the “movie” stocks but there may be an opportunity to make some trades within the sector as we head into a festive time of the year. Thanksgiving through Christmas is movie heaven and there’s a chance some of these beaten down stocks could recover.
The one player I do like in the sector is Imax (IMAX, $2.73, down $0.08) and I have mentioned this stock before at higher levels. I do not trust the stock enough to buy any longer-term options (yet) but Imax could be a force in the movie industry down the road.
Although we were successful in riding Imax to its 52-week high, the stock has dropped nearly 70% from a peak of $8.28. The stock is cheap enough to the point where instead of making an option trade it might be better off to buy the stock. It eliminates the risk of an option expiring worthless and if Imax can get to $10, you would easily triple your money.
Imax has its fingers in a lot of pies and is developing some solid business partners and relationships with some top-tier names. The company recently inked a deal with Walt Disney (DIS, $21.94, up $0.48) and is strategically building the “Imax Experience” into a tidal wave. ” (END)
If you had just bought the stock back then you would be up nearly 250% today. So what is next for Imax?
To read the rest of this story, please go to our Members Area. Subscribers click on Tuesday’s link 9/8/09.
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3. Earnings
Monday: Market Closed
Note: Check the Members Area for a possible trade on a couple of these names.
Tuesday: Casey’s General Stores (CASY, $28.32, up %0.06), Nobel Learning Communities (NLCI, $10.32, down $0.06), Pep Boys (PBY, $9.30, up $0.60), Smithfield Foods (SFD, $13.04, up $0.31).
Wednesday: Globecomm Systems (GCOM, $7.60, up $0.43), Hi-Tech Pharmacal (HITK, $15.79, up $1.00), Investors Real Estate (IRET, $9.19, up $0.12), Men’s Wearhouse (MW, $25.91, up $0.66), Shuffle Master (SHFL, $7.50, up $0.25), Smith & Wesson Holding (SWHC, $5.28, up $0.09) and United Natural Foods (UNFI, $27.86, up $0.43).
Thursday: AEP Industries (AEPI, $38.18, up $0.40), Lululemon Athletica (LULU, $19.97, up $0.18) and Navistar International (NAV, $46.35, up $1.50).
Friday: Aceto (ACET, $6.50, down $0.06), Brady Corporation (BRC, $30.35, up $0.56) and Campbell Soup (CPB, $31.19, up $0.31).
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4. Current Trades
For our current trades please check the Members Area.
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5. Closing Thoughts
Depending on this week, it looks as though the bulls are at least going to hold Dow 9,000 as we head into 3Q earnings season. We saw a lot of companies beat in the second quarter but that was by cutting costs. We will need to see revenue growth at some point.
We were shaky on Tuesday with the Financials taking a hit and the China market tanking but the sell-off didn’t have any follow through. By Thursday, the bulls were back in buying the dip and started nibbling again on Friday.
As I go to press, Dow futures are up 45 while the Nasdaq and S&P 500 futures are up 6. That means that sentiment is leaning towards a positive open on Tuesday.
Rick Rouse
Rick@MomentumOptionsTrading.com
Tags: Campbell Soup, Citigroup, Dendreon, Imax rumors, Marvel Entertainment, MomentumOptionsTrading.com, options blog, Pep Boys, Time Warner, Walt Disney
Posted in Company Commentary, Earnings, Economic News, Entertainment Stocks, Financial Stocks, Hot Stocks, Market Analysis, Mergers and Acquisitions, Option Trades, Sectors, Strategies, Weekly Wrap | Comments Off
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Bulls Running To Start The Week
Monday, October 5th, 2009
3:00pm (EST)
The bulls got the ball rolling today after a positive ISM number this morning has put Wall Street in a buying mood. The Institute for Supply Management said its service index rose to 50.9 in September from 48.4 in August. The Street had expected a reading of 50, and anything over that is considered growth. Below 50 is considered contraction.
The rally has also been fueled by positive comments on the Financial stocks as Goldman Sachs (GS, $185.16, up $5.55) upgraded the large banks. Bank of America (BAC, $16.81, up $0.47) is up 3% and is looking attractive at $16-$17. This is easily a $25 stock by early 2010.
As a result, the Dow is currently up 136 points to 9,623 while the S & P 500 is up 17 to 1,042. The Nasdaq is up 26 points to 2,074.
Exxon Mobil (XOM, $67.62, up $1.04) was looking good at $66 on Friday and I have mentioned this support area several times over the last few weeks. Oil took a hit last week but has gained 76 cents to $70.71 today. Some are calling for oil to dip to the high $50′s while others are expecting a run to $85-$90 over the short-term. I’m not sure if there is an option trade on XOM just yet but it is getting interesting and I would expect shares to make a run back to $70 over the next couple of weeks.
Research In Motion (RIMM, $65.87, up $0.45) also looks like it has bottomed and has traded as high as $67.74 today. I think there is a trade on this one but I’m not quite ready to pull the trigger. RIMM was on our radar Friday but the waters were too muddy for us to make a play. However, I may add some insurance to the trade which is why we are holding off.
One trade we did take today was Pepsico (PEP, $60.79, down $0.11) and we got some great entry prices by waiting until after the market opened. Our other trades in Abercrombie & Fitch (ANF, $30.40, down $0.22), Citigroup (C, $4.64, up $0.12) and Imax (IMAX, $9.60, up $0.30) are also heading in the right directions today.
I will be back in the morning with the complete updates and we will be back on regular schedule on Tuesday. Subscribers, if you have not read the Pepsico trade for today, you can check the Members Area for this morning’s update.
Rick@MomentumOptionsTrading.com
Tags: momentum options trading, Momentum stocks, option trade picks, options blog, options mentoring, options track record
Posted in Company Commentary, Earnings, Entertainment Stocks, Financial Stocks, Market Analysis, Oil, Option Trades | Comments Off