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Monday, October 15th, 2012
1:05pm (EST)
We said the bulls needed to get off to a good start today and for the most part, they have. The indexes are at their highs as we prepare our update but the bears have also had their fingers in the pie as the market has traded on both sides of the ledger and the afternoon closes have been weak of late.
Economic news came in better-than-expected as Retail Sales rose 1.1% for September. The numbers were also revised to show higher gains in July and August. The forecast was for a pop of 0.9%. This was a good report for the bulls as consumer spending accounts for two-thirds of the U.S. economy.
As far as earnings, Citigroup (C, $36.31, up $1.56) shares are trading higher after the company beat Wall Street’s estimates for the quarter. Citigroup posted a profit of $1.06 a share or revenue of $19.4 billion. The suit-and-ties were looking for $0.96 a share on revs of $18 billion.
We talked about how the Financial stocks needed to show some strength this week and like a rising tide, Citigroup has lifted other boats. Bank of America (BAC, $9.32, up $0.20) is up 2% while JPMorgan Chase (JPM, $42.34, up $0.72) is also getting a pop.
We have a lot to cover today with our current trades so let’s go check the action.
Posted in Earnings, Financial Stocks, Market Analysis | Comments Off
Monday, October 15th, 2012
9:00am (EST)
“The first clue we were looking for last week was the close on Monday. The bears had won 3-straight Friday/ Monday’s but that streak was snapped as the Dow and S&P 500 were up 0.5%, on average, Monday. This past Friday was negative but the blue-chips were up and the VIX closed lower. The Monday win was only the second in 4 months for the bulls and if this Monday is negative then we can still use the closes as clues money is still moving out of the market.
Shares of Alcoa (AA, $9.09, up $0.02) were up for the week but we wanted to see a close past $9.20 as indication the company might report better-than-expected earnings. Alcoa has beaten Wall Street’s estimates the last 2 quarters, and they still might, but after opening higher, shares finished lower for the session back in July. They will confess on Tuesday after the bell.
As far as the overall 3Q earnings picture, the suit-and-ties are looking for quarterly earnings to decline by 2%. The biggest sectors that could drag down results are the oil and gas companies. Many of the pencil-pushers have said overall earnings would be up 2%, if not for their weaker-than-expected results. However, there were some big Tech names that have already warned which makes this a treacherous earnings season to trade.
In some cases, the bar has been lowered from the previous quarter so companies could surprise to the upside. There will also be a few high profile companies who didn’t warn over the past week or two that could miss by a penny or three. These companies could see their stock prices hammered if they miss estimates by a mile and investors’ wonder why they didn’t warn.
We have also said the Financial stocks needed to show some strength and over the past few weeks they have. JPMorgan Chase (JPM, $41.71, down $0.11) and Wells Fargo (WFC, $35.48, down $0.13) will report their numbers on Friday so watch how they trade this week.
The biggest development we saw on Friday was how Apple (AAPL, $652.59, down $14.21) traded. We profiled 2 sweet option trades for the Daily last week using Apple call options as we said to watch for the $650 level to hold last Tuesday. Shares made a run to $675 two days later which we said was resistance and where to close the trade at. The 2 call option trades made 100% and 50%, respectively, in 48 hours. We are thinking about playing Apple this week but we could be playing it to the downside if $650 doesn’t hold.
Apple is a big component of the market and any weakness trickles down to the major averages just like it does when shares are rallying. Apple shares make up 20% of the Nasdaq so a test back to $620 would spell trouble for Tech and the market, overall. If $650 holds and Apple announces the iPad mini this week like we have predicted then shares could push $675 or even $700 again. Monday could be a big swing day and we will be watching the stock like a hawk at the open.
Europe will be back in the news this week, specifically Greece and Spain. There were rumors Spain would ask for a bailout over the weekend but they will likely wait a couple of more weeks before doing so. Greece wants the European Central Bank (ECB) to give them more money or forgive more debt so this situation is only worsening and could be in the headlines this week.
The charts are bullish and if the bulls can hold or advance the flag to start the week, we could see a push towards our upper end price targets. The fundamentals do not support a further rally but we have to trade what is in front of us and respect the wall of worry. At the same time, we are preparing for some sort of pullback, perhaps major, and when we will get defensive.
We said last week to respect October’s history but we also know you can’t fight the trend or the Fed which is why we have done well with call options over the past couple of months. We still have some defensive positions open in our Daily for protection and if the market continues higher we should get called away from a few more trades in our Weekly.
There are still a number of headwinds, both positive and negative, facing the market but by the end of the week, we should see one side emerge from the current 3-week trading range. The bulls have shown strength all year long but the bears might growl once more before they go in hibernation for the rest of the year.” (from 10/7/2012 Weekly Wrap/ Monday Morning Outlook)…
The market had its worst week in nearly 5 months as the bears scored a -2+% win. The downside targets we set last week were all in play on Friday as the bulls held support for the most part. The pullback lasted all week long as the bears pulled a clean sweep to run their winning streak to 6-straight sessions. The question is will Wall Street buy the dip or will the bears’ growl grow louder as we head into the heart of 3Q earnings season.
**************************************
If you are not a subscriber but would like to read more please click here. We are one of the fastest growing stock options trading advisors on the internet and we are doing well for 2012. We offer 2-3 powerful call or put option trades each week (depending on market conditions) aimed at triple-digit returns for our Daily newsletter and our Weekly Wrap Covered Call Portfolio strides for double-digit returns on a monthly basis and is 24-0. Together, we are 135-45 (75% win rate) for both newsletters and we doubt you will find a hotter options trading service.
Tags: Covered Calls, JPM, JPM earnings, option trading
Posted in Financial Stocks, Market Analysis, Market Commentary, Strategies | Comments Off
Friday, September 21st, 2012
9:00am (EST)
The market had another mixed session that ended pretty much the same way as the day before as the blue-chips managed a small gain while Tech and the Financial stocks held back the other indexes.
The Dow gained 19 points, or 0.1%, to settle close at 13,596.93. The blue-chips reached a peak of 13,599.02 and we showed the decimals which emphasizes just how close the bulls were to closing above resistance at 13,600.
The S&P 500 declined less than a point, or 0.1%, to finish at 1,460. The index traded down to 1,449.98 which was a grass blade below 1,450 and another key level we have been mentioning as prior resistance and is now trying to hold as key support. The S&P also made a brief trip into positive territory late in the session but it was less than a fifth of a point. The magic close for the bulls will be 1,475 or better which is a 1% move on a typically bullish September option expiration day.
The Nasdaq slipped 6.66 points, or 0.2%, to end at 3,175. Ironic, huh? We have mentioned support at 3,150 has been solid all week and yesterday’s low came in at 3,156. Although Tech has been lagging, Wall Street is buying the dips for now.
The Russell 2000 traded below our 850 support target and hit 847 before rebounding. The small-caps settled at 851.51, down nearly 5 points, and stayed in the red all day like Tech. The S&P 500 Volatility Index ($VIX, 14.07, up 0.19) barely budged and stayed well below 15 after peaking at 14.67.
The bears are up nearly 1% for the week but we mentioned in our Weekly Wrap September option expiration day has been bullish over the past decade. Futures were up throughout the night and have gotten stronger as we head to press: Dow (+57), S&P 500 (+6); Nasdaq 100 (+15).
We could have another busy day as there a few trades on our Watch List that look ripe for the picking. We have room for up to 5 more New Trades so stay locked and loaded in case we take action. Subscribers, check the Members Area for the current trade updates.
Tags: blue-chip stocks, chicken option trade, chicken trade, momentum, momentum options, option mentoring, stock options trading advisors, straddle option trade
Posted in Financial Stocks, Market Analysis, Market Commentary, VIX | Comments Off
Wednesday, September 5th, 2012
1:05pm (EST)
Shares of FedEx (FDX, $86.49, down $1.05) are trading lower today after the company warned after the bell on Tuesday that if would miss current estimates for the upcoming quarter. FedEx now expects to post a profit of $1.37-$1.43 versus its earlier forecast for $$1.45-$1.60 a share. Wall Street’s expectations called for $1.56 a share, on average.
There are still some companies reporting earnings for the April-June period which started in July which and can last through mid-September. Usually, companies wait until the back-half of the last month for the current quarter (late March, June, September and December) to announce warnings or earnings misses. FedEx felt it needed to deliver this news right away which means they must not have much faith that revenues will be picking up. Perhaps they will when the holidays roll around.
This was not good news for the Transportation sector or the Dow Transports which we mentioned were coming into the week at crucial levels. Here is the chart we drew up in the sand over the weekend:
Here is what it looks like today:
We said the Dow Transports (and the Financial sector) would have to show some legs to power the next rally and today’s FedEx warning was a slight setback. The stock has bounced off its lows and the above chart shows the bottom channel of support holding for the Dow Transports so these are positive signs. Two more warning signs to add to the bears checklist for a lower market would be FedEx closing below $85 and the DT’s closing below 4,950 somewhere down the road.
As far as the market, rumors are swirling on what the European Central Bank (ECB) will say on Thursday and Friday we get the U.S. Nonfarm payroll numbers. Besides the possible Europe news, Thursday will be a big day for employment numbers as Challenger Jobs Cuts (7:30am), ADP Employment Change (8:15am) and Initial/ Continuing Claims (8:30am) are all due out before the opening bell. At 10am, ISM Services will be announced.
We would expect when we go to press Friday afternoon, the landscape could be totally different in 48 hours with either the bears pushing the next wave of support or the bulls looking at a jailbreak.
Currently, the Dow is 33 points to 13,069 while the S&P 500 is higher by a point to 1,406. The Nasdaq is advancing 4 points to 3,079.
We have much more to talk about inside our Members Area so let’s get to it. We will be back in the morning with our next update but stay ready over the next 2 days for some fireworks.
Tags: ADP Employment Change, Dow Transports, European Central Bank (ECB), FDX options
Posted in Economic News, Financial Stocks, Market Analysis, Market Commentary, Sectors | Comments Off
Thursday, July 12th, 2012
12:55pm (EST)
Futures were down when we started researching the overseas news last night and got progressively worse before the European markets opened. The overnight action was a good clue there would be more downside momentum although economic news at home came in better-than-expected.
Initial Claims came in at 350,000 which was much lower than the 372,000 that had been penciled-in. Continuing Claims fell by 14,000 to 3.02 million. Elsewhere, Import Prices fell 2.7% in June, versus estimates for a drop of 1.8%. Export Prices slipped 1.7% which was worse than the forecast for a dip of 0.2%.
JPMorgan Chase (JPM, $33.37, down $0.22) and Wells Fargo (WFC, $32.95, down $0.32) will report earnings before tomorrow’s open and their results will weigh on the Financial sector. Much of the focus will be on how much money JP lost on its “whale trade”, not its earnings, and our over/under is $4 billion. JPMorgan said its losses would be $2 billion but some estimates are north of $5 billion. Either way, it’s not going to be lower than $2 billion so the headline should be negative. How well JP does on matching or beating estimates will depend on how much capital they raised to offset the losses.
As far as economic news for Friday, the Producer Price Index (PPI) will be released at 8:30am (EST) while Michigan Sentiment numbers will be released at 9:55am.
We have to be respectful of a possible market bounce on better-than expected results from JP and Wells but any rallies should be sold from here on out.
As we head into the second half of trading, the Dow is down 43 points to 12,560 while the S&P is off 9 points to 1,332. The Nasdaq is lower by 34 points to 2,853.
Subscribers, check the Members Area for latest and greatest.
Tags: JPM call options, JPM put options, JPMorgan Chase (JPM), Wells Fargo earnings, WFC call options
Posted in Earnings, Economic News, Financial Stocks, Market Analysis | Comments Off
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Bulls Need a Strong Start to the Week
Monday, October 15th, 2012
9:00am (EST)
“The first clue we were looking for last week was the close on Monday. The bears had won 3-straight Friday/ Monday’s but that streak was snapped as the Dow and S&P 500 were up 0.5%, on average, Monday. This past Friday was negative but the blue-chips were up and the VIX closed lower. The Monday win was only the second in 4 months for the bulls and if this Monday is negative then we can still use the closes as clues money is still moving out of the market.
Shares of Alcoa (AA, $9.09, up $0.02) were up for the week but we wanted to see a close past $9.20 as indication the company might report better-than-expected earnings. Alcoa has beaten Wall Street’s estimates the last 2 quarters, and they still might, but after opening higher, shares finished lower for the session back in July. They will confess on Tuesday after the bell.
As far as the overall 3Q earnings picture, the suit-and-ties are looking for quarterly earnings to decline by 2%. The biggest sectors that could drag down results are the oil and gas companies. Many of the pencil-pushers have said overall earnings would be up 2%, if not for their weaker-than-expected results. However, there were some big Tech names that have already warned which makes this a treacherous earnings season to trade.
In some cases, the bar has been lowered from the previous quarter so companies could surprise to the upside. There will also be a few high profile companies who didn’t warn over the past week or two that could miss by a penny or three. These companies could see their stock prices hammered if they miss estimates by a mile and investors’ wonder why they didn’t warn.
We have also said the Financial stocks needed to show some strength and over the past few weeks they have. JPMorgan Chase (JPM, $41.71, down $0.11) and Wells Fargo (WFC, $35.48, down $0.13) will report their numbers on Friday so watch how they trade this week.
The biggest development we saw on Friday was how Apple (AAPL, $652.59, down $14.21) traded. We profiled 2 sweet option trades for the Daily last week using Apple call options as we said to watch for the $650 level to hold last Tuesday. Shares made a run to $675 two days later which we said was resistance and where to close the trade at. The 2 call option trades made 100% and 50%, respectively, in 48 hours. We are thinking about playing Apple this week but we could be playing it to the downside if $650 doesn’t hold.
Apple is a big component of the market and any weakness trickles down to the major averages just like it does when shares are rallying. Apple shares make up 20% of the Nasdaq so a test back to $620 would spell trouble for Tech and the market, overall. If $650 holds and Apple announces the iPad mini this week like we have predicted then shares could push $675 or even $700 again. Monday could be a big swing day and we will be watching the stock like a hawk at the open.
Europe will be back in the news this week, specifically Greece and Spain. There were rumors Spain would ask for a bailout over the weekend but they will likely wait a couple of more weeks before doing so. Greece wants the European Central Bank (ECB) to give them more money or forgive more debt so this situation is only worsening and could be in the headlines this week.
The charts are bullish and if the bulls can hold or advance the flag to start the week, we could see a push towards our upper end price targets. The fundamentals do not support a further rally but we have to trade what is in front of us and respect the wall of worry. At the same time, we are preparing for some sort of pullback, perhaps major, and when we will get defensive.
We said last week to respect October’s history but we also know you can’t fight the trend or the Fed which is why we have done well with call options over the past couple of months. We still have some defensive positions open in our Daily for protection and if the market continues higher we should get called away from a few more trades in our Weekly.
There are still a number of headwinds, both positive and negative, facing the market but by the end of the week, we should see one side emerge from the current 3-week trading range. The bulls have shown strength all year long but the bears might growl once more before they go in hibernation for the rest of the year.” (from 10/7/2012 Weekly Wrap/ Monday Morning Outlook)…
The market had its worst week in nearly 5 months as the bears scored a -2+% win. The downside targets we set last week were all in play on Friday as the bulls held support for the most part. The pullback lasted all week long as the bears pulled a clean sweep to run their winning streak to 6-straight sessions. The question is will Wall Street buy the dip or will the bears’ growl grow louder as we head into the heart of 3Q earnings season.
**************************************
If you are not a subscriber but would like to read more please click here. We are one of the fastest growing stock options trading advisors on the internet and we are doing well for 2012. We offer 2-3 powerful call or put option trades each week (depending on market conditions) aimed at triple-digit returns for our Daily newsletter and our Weekly Wrap Covered Call Portfolio strides for double-digit returns on a monthly basis and is 24-0. Together, we are 135-45 (75% win rate) for both newsletters and we doubt you will find a hotter options trading service.
Tags: Covered Calls, JPM, JPM earnings, option trading
Posted in Financial Stocks, Market Analysis, Market Commentary, Strategies | Comments Off