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Tuesday, June 7th, 2011
12:50pm (EST)
The bulls have managed a slight bounce from the recent 4-day selloff but their momentum has been limited ahead of Fed Chairman Ben Bernanke’s speech on the economy. The headlines won’t hit the market until 15 minutes before the close as he is in Hot-lanta, Georgia and is scheduled to speak at 3:45pm (EST).
The Financial stocks got a nice pop at the open following the beat down from Monday but are off their best levels of the day and are struggling to hold gains.
There is a meet-and-greet session at the White House today between Obama and Germany’s Chancellor, Angela Merkel, who got the red carpet treatment. The two will be talking about the growing relationship between the U.S. and Germany and how important their input is on global matters.
Oil is back under $100 ($98/ -$1) ahead of OPEC’s meeting on Wednesday as most experts anticipate increased production to continue. Gold is down $10 to $1,537 an ounce while silver is off by 22 cents to $36.56 an O.
As far as the major indexes, the Dow is higher by 60 points to 12,150 while the S&P is up 6 points to 1,292. The Nasdaq is showing a 7 point gain and is at 2,709.
We have added a few more possible trades to our Watch List as we wind down some older positions and protect profits in others. We are setting up nicely for our next “batch” of trades which could be quick hits if support fails. Subscribers, check the Members Area for the updates.
Tags: Ben Bernanke, call options, high beta stocks, Hot stocks, momentum options, Momentum stocks, option tips, options, options mentoring, options trading course, stock market options, weekly options
Posted in Economic News, Financial Stocks | Comments Off
Tuesday, June 7th, 2011
9:00am (EST)
We knew yesterday (and this week) was going to be a challenge for the bulls following 5-straight weeks of losses and Friday’s push towards lower support levels was a confirmation they would be tested on Monday. The bears grabbed the bulls by their horns shortly after the open but failed to tie them up as they fought back by lunchtime. However, shortly afterwards, the momentum picked up and by the closing bell the bears had gained their 4-straight session win.
Yesterday’s sell-off has the major indexes on the verge of their March lows as both the S&P and Nasdaq dropped over 1% for the day. The Dow managed to keep its losses to half of what its counterparts experienced but the landscape was still the same as it neighbors no matter how you dress it up.
The Dow fell 61 points to finish at 12,089 and traded to a low of 12,070 for the day. The crucial test will come at 12,000 and a break below this level could lead to 11,500. If the bulls hold, 12,200 and then 12,350 will act as short-term resistance.
The S&P 500 dropped 14 points and closed at 1,286 after kissing a low of 1,284. We have targeted 1,275 to the downside but said 1,250 could come into play if there is continued weakness. The 1,295-1,300 level is now short-term resistance followed by 1,325.
The Nasdaq got whacked for 30 points and ended at 2,702 and at its lows for the day. The index held 2,700 which we outlined as support but there is further weakness down to 2,650-2,625. Short-term resistance remains 2,775-2,800.
One sector that continues to get pounded harder than a football dummy is the Financials which fell 2%, on average. At some point these heavyweights will be a “Buy” but by looking at the carnage from yesterday, we would still wait to start nibbling.
Bank of America (BAC, $10.83, down $0.45) hit a fresh 52-week low of $10.75 and here is what we said about the stock on March 24, 2011:
“We talked a little about the Financial stocks yesterday and it’s the one sector that we want to trust, know is going to rebound, but when? Despite the fact that many of Banking stocks are ready to resume their dividend payouts or raise their dividend altogether, it seems they have to ask the Fed’s permission to do so.
Bank of America (BAC, $13.65, down $0.23) fell nearly 2% and traded down to $13.37 after the Federal Reserve rejected its plan to raise their dividend. The boys on the hill are allowing several major banks to increase their dividends after passing stress tests but BofA wasn’t one of them. The company said it expects to submit another request to increase its dividend this year so stay tuned.
Shares of Bank of America have been stuck in the $13-$15 range since the beginning of the year and are at the bottom. While there is still risk down to $10 on a market sell-off, shares will rebound eventually depending on your time horizon.
This situation reminds us of 2009 when the stock was at $5 and we suggested buying calls to take advantage of a strong rebound. Some of our recommendations returned incredible gains (567% and 433%) as Bank of America rebounded strongly and traded back above $10. (Check out our 2009 track record to see all of our results).
While it is hard to predict a bottom for a stock, shares of BofA are looking like a bargain. By no means do we think shares will double over the next month and they could trade even lower from current levels. What we do believe is that shares will trade $20 (6-12 months) at some point if they can report solid numbers in their upcoming quarter and afterwards. However, we are still on the fence with recommending an option trade on it.” (END)
At $10-and change, Bank of America is getting very attractive to lock away for a few years but there is now risk to the high single-digits for the stock.
We aren’t a big believer in Citigroup (C, $38.07, down $1.78) because it looks like a pig with lipstick following its 1-for-10 reverse stock-split. We do like JP Morgan Chase (JPM, $40.53, down $1.04) as well but it too has been hit hard.
The bank stock are set to rebound just a day later after news that broke late last night that the Fed supports a 3% surcharge instead of the 7% surcharge that had been expected. This means banks will have to keep less cash reserves on their books then expected which means they can loan more.
We have a lot more to cover in our Members Area including a Special Update which explains our trading strategies and style in better detail. We have a lot of new subscribers who have signed up for our option trading course so we have will also try release a NEW video in the next day or two. Thanks to everyone who purchased the 1-yr membership to the Weekly Wrap to get the course at no charge. Speaking of which, we were able to close one of our trades from that portfolio yesterday for a 9% profit.
Futures are pointing towards a higher open so let’s see if it holds.
Tags: call options, high beta stocks, Hot stocks, momentum options, Momentum stocks, option tips, options, options mentoring, options trading course, stock market options, weekly options
Posted in Financial Stocks, Market Analysis, Market Commentary | Comments Off
Wednesday, May 25th, 2011
9:10am (EST)
We thought there would be a little more bullish action yesterday following Monday’s selloff, but the bulls struggled to hold onto their early gains as the bears finished the day on top for the third-straight session.
Economic news started off with better-than-expected housing data but the market lost some steam after learning the Richmond Fed’s manufacturing index fell from an April reading of 10 to a May print of negative 6. After seven consecutive months of growth, this was not a good sign as it suggested business activity in the region is contracting.
Elsewhere, Financial stocks traded slightly higher despite news of the FDIC saying the number of problem banks in the U.S. is now up to nearly 900 for 2011. Bank of America (BAC, $11.46, up $0.04), Citigroup (C, $40.51, up $0.35) and Goldman Sachs (GS, $136.34, up $0.50) all saw a green close. More on Goldman in a minute…
As far as the market, the Dow slipped 25 points to settle at 12,356 and above our 12,350 downside target which happened to be the intraday low. There is still risk down to 12,200-12,000 over the short-term.
The S&P 500 fell a point and closed at 1,316 after kissing 1,313 and settled right between our 1,300-1,325 zone. The index reached a high of 1,323.72 which was enough to tease the bulls but a break below 1,300 could cause panic.
The Nasdaq caused us a little concern for the bulls as the index dropped a dozen points and finished at 2,746. We have been preaching the 2,750 level as serious support and it was the first close for Tech below this level in more than a month. The bears will now target 2,725-2,700 over the next few days.
Back to Goldman Sachs. From May 12 (quotes and chart from that day):
“Goldman Sachs (GS, $140.74, down $7.14) is down 5%, following an analyst downgrade from “Hold” to “Sell” and broke major support at $145. From the chart, you can see there is downside risk to $135 which is probably where they fall into a trading range. Shares have traded to a low of $140.66 after falling through the first wave of support at $145 which was prior resistance.
The next test could come in at $135 if the $140 level is violated.” (END)
Folks, Goldman touched a low of $139.25 the very next day and tried to hold the $140 level all last week. They did until Friday as shares fell over $4 to close at $134.99. On Monday, the stock traded to a low of $133.64 before finding buyers.
Although shares appear cheap, trading at just 15 times earnings, there could be further weakness in Goldman which seems to be losing its luster. The 52-week low is $129.50 for Golden Slacks and it just feels like the stock is going to hit new lows before there is a serious rebound.
Futures are pointing towards a lower open this morning so we expect our aforementioned targets to come into play today. Dow futures are down 33 points while the S&P futures are off 5 points. The Nasdaq futures are lower by 6 points.
Subscribers, check the Members Area for the updates.
Tags: call options, high beta stocks, Hot stocks, momentum options, Momentum stocks, option tips, options, options mentoring, options trading course, stock market options, weekly options
Posted in Financial Stocks, Hot Stocks, Market Analysis, Market Commentary | Comments Off
Monday, May 16th, 2011
12:25pm (EST)
After a lower open, the market is trying to recover and is mixed as we head into the second half of trading. Tech has been weak but the Financial stocks have shown some strength following Friday’s pounding.
Earnings are winding down and this week Wall Street will focus on the Retailer sector as a number of high profile companies are expected to report. J.C. Penney (JCP, $38.03, down $0.31) got the ball rolling this morning and reported better-than-expected numbers although shares are slightly lower after opening near $41.
In economic news, the Empire State Manufacturing Survey for May came in at 11.9, which was well below estimates for a print of 18. This was nearly half the reading from April’s 21.7 posting and weighed on futures before the open.
Despite the headwinds, the Dow is up 20 points to 12,615 while the S&P 500 is higher by a point to 1,339. The Nasdaq is lower by 17 points to 2,811.
Although the Financial sector has lagged, now might be a good time to go bottom fishing. Bank of America (BAC, $11.99, up $0.06) broke below $12 a share on Friday and is on its way of testing its 52-week low of $10.91. At some point folks, this is a $20 stock but it might take a few years to get there. Most of the financial websites will list the “book value” of Bank of America at $20 which means shares are trading at half their book. However, we like to look at the “tangible” book value which for BofA is $12-$13.
The tangible book value is what shareholders can expect to receive if Bank of America goes bankrupt and its assets are liquidated. The higher the tangible book value, the better, as it provides shareholders with more insurance. At some point, the Financial stocks will bounce back but we are hoping shares of BofA can come down a little more.
At $10, we might start backing the truck up.
We have updated our current trades and we are seeing some decent action today. We are in a stock picker’s market and one where you need to hedge your bets. We have a mixture of calls and puts that we are using to play the market’s short-term and long-term moves as we wait for the next breakout (or breakdown). Subscribers, check the Members Area for the trade updates.
Tags: bac, Bank of America’s book value, call options, high beta stocks, Hot stocks, JCP, momentum options, Momentum stocks, NYSE: BAC, option tips, options trading course, stock market options, strangle option trades, weekly options
Posted in Financial Stocks, Market Commentary | Comments Off
Thursday, May 12th, 2011
1:05pm (EST)
The bears got an early jump at the open and tested support but the bulls have managed to hold and are pushing back. We mentioned Cisco System’s (CSCO, $16.95, down $0.84) earnings this morning but Tech has held up well despite Cisco’s 5% drop. Economic news has been disappointing and the Financial sector continues to die a death by a thousand cuts.
Before the bell, Wall Street learned the Producer Price Index (PPI) for April increased 0.8%, which was greater than the 0.5% increase that has been penciled in. Core PPI rose 0.3% in April, versus expectations for a 0.2% pop.
Elsewhere, Retail Sales were higher by 0.5% for April but came up short as expectations were pegged for a 0.6% increase. The silver lining was that retail sales, less auto sales, actually came in better-than-expected at 0.6%, which was greater than the 0.5% rise that has been expected.
And finally, Initial Claims were 434,000 for the week, which was higher than the 423,000 that had been forecast. The latest count is down from last week’s upwardly revised total of 478,000.
The Dow traded to a low of 12,537 but has held our 12,500 downside target. The blue-chips are currently up 5 points to 12,635 and is breaking out to new highs. The S&P is up a point to 1,342 while the Nasdaq is up 6 points to 2,851. Both indexes have also held our downside targets of 1,325 and 2,800, respectively.
Goldman Sachs (GS, $140.74, down $7.14) is down 5%, following an analyst downgrade from “Hold” to “Sell” and broke major support at $145. From the chart, you can see there is downside risk to $135 which is probably where they fall into a trading range. Shares have traded to a low of $140.66 after falling through the first wave of support at $145 which was prior resistance. The next test could come in at $135 if the $140 level is violated.
We have a lot to cover in our Members Area and we have been expecting somewhat of a bounce in the afternoon session which may or may not hold. We think it will as we have a NEW TRADE!
Subscribers, check the Members Area for the new recommendation and for our current updates.
We will be back in the morning with our next market update.
Tags: call options, Goldman Sachs downgrade, GS, high beta stocks, Hot stocks, momentum options, Momentum stocks, NYSE: GS, option tips, options trading course, stock market options, strangle option trades, weekly options
Posted in Financial Stocks, Market Analysis | Comments Off
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Bulls Face More Pressure
Tuesday, June 7th, 2011
9:00am (EST)
We knew yesterday (and this week) was going to be a challenge for the bulls following 5-straight weeks of losses and Friday’s push towards lower support levels was a confirmation they would be tested on Monday. The bears grabbed the bulls by their horns shortly after the open but failed to tie them up as they fought back by lunchtime. However, shortly afterwards, the momentum picked up and by the closing bell the bears had gained their 4-straight session win.
Yesterday’s sell-off has the major indexes on the verge of their March lows as both the S&P and Nasdaq dropped over 1% for the day. The Dow managed to keep its losses to half of what its counterparts experienced but the landscape was still the same as it neighbors no matter how you dress it up.
The Dow fell 61 points to finish at 12,089 and traded to a low of 12,070 for the day. The crucial test will come at 12,000 and a break below this level could lead to 11,500. If the bulls hold, 12,200 and then 12,350 will act as short-term resistance.
The S&P 500 dropped 14 points and closed at 1,286 after kissing a low of 1,284. We have targeted 1,275 to the downside but said 1,250 could come into play if there is continued weakness. The 1,295-1,300 level is now short-term resistance followed by 1,325.
The Nasdaq got whacked for 30 points and ended at 2,702 and at its lows for the day. The index held 2,700 which we outlined as support but there is further weakness down to 2,650-2,625. Short-term resistance remains 2,775-2,800.
One sector that continues to get pounded harder than a football dummy is the Financials which fell 2%, on average. At some point these heavyweights will be a “Buy” but by looking at the carnage from yesterday, we would still wait to start nibbling.
Bank of America (BAC, $10.83, down $0.45) hit a fresh 52-week low of $10.75 and here is what we said about the stock on March 24, 2011:
“We talked a little about the Financial stocks yesterday and it’s the one sector that we want to trust, know is going to rebound, but when? Despite the fact that many of Banking stocks are ready to resume their dividend payouts or raise their dividend altogether, it seems they have to ask the Fed’s permission to do so.
Bank of America (BAC, $13.65, down $0.23) fell nearly 2% and traded down to $13.37 after the Federal Reserve rejected its plan to raise their dividend. The boys on the hill are allowing several major banks to increase their dividends after passing stress tests but BofA wasn’t one of them. The company said it expects to submit another request to increase its dividend this year so stay tuned.
Shares of Bank of America have been stuck in the $13-$15 range since the beginning of the year and are at the bottom. While there is still risk down to $10 on a market sell-off, shares will rebound eventually depending on your time horizon.
This situation reminds us of 2009 when the stock was at $5 and we suggested buying calls to take advantage of a strong rebound. Some of our recommendations returned incredible gains (567% and 433%) as Bank of America rebounded strongly and traded back above $10. (Check out our 2009 track record to see all of our results).
While it is hard to predict a bottom for a stock, shares of BofA are looking like a bargain. By no means do we think shares will double over the next month and they could trade even lower from current levels. What we do believe is that shares will trade $20 (6-12 months) at some point if they can report solid numbers in their upcoming quarter and afterwards. However, we are still on the fence with recommending an option trade on it.” (END)
At $10-and change, Bank of America is getting very attractive to lock away for a few years but there is now risk to the high single-digits for the stock.
We aren’t a big believer in Citigroup (C, $38.07, down $1.78) because it looks like a pig with lipstick following its 1-for-10 reverse stock-split. We do like JP Morgan Chase (JPM, $40.53, down $1.04) as well but it too has been hit hard.
The bank stock are set to rebound just a day later after news that broke late last night that the Fed supports a 3% surcharge instead of the 7% surcharge that had been expected. This means banks will have to keep less cash reserves on their books then expected which means they can loan more.
We have a lot more to cover in our Members Area including a Special Update which explains our trading strategies and style in better detail. We have a lot of new subscribers who have signed up for our option trading course so we have will also try release a NEW video in the next day or two. Thanks to everyone who purchased the 1-yr membership to the Weekly Wrap to get the course at no charge. Speaking of which, we were able to close one of our trades from that portfolio yesterday for a 9% profit.
Futures are pointing towards a higher open so let’s see if it holds.
Tags: call options, high beta stocks, Hot stocks, momentum options, Momentum stocks, option tips, options, options mentoring, options trading course, stock market options, weekly options
Posted in Financial Stocks, Market Analysis, Market Commentary | Comments Off