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Friday, April 15th, 2011
8:50am (EST)
The bulls got their second straight win on Thursday but the margin of victory matched Wednesday’s slight gains. The bears dominated the early action after hearing initial jobless claims rose by 27,000 week-over-week to 412,000. Wall Street was looking for 385,000 and the jump back over 400,000 was the headline shocker. This was the first time in more than a month initial claims exceeded 400K which caused the weakness at the open.
Financial stocks also broke down (again), after rallying past their 50-day moving averages last week. The lack of leadership from this sector is really starting to weigh on the bulls and we mentioned yesterday that it will take another quarter or two before they bottom or start to rebound. We took a chance that there would be a slight rally but we got punched in the face by JPMorgan (JPM, $44.97, down $1.28) which told us to wake up.
Oil was also up and closed above $108 a barrel but somehow, someway, the bulls got a “W”.
The Dow added 14 points to finish at 12,285 but traded to a low of 12,163. The index did reach a high of 12,305 which was prior support but is now acting like resistance. The break below 12,200 has our attention as it appears 12,000 could come into play as early as next week.
The S&P was up less than a point and remained at 1,314 after trading down to 1,302. We mentioned on Monday the close below 1,325 spelled 1,300 for the index. More importantly, a break below 1,300 leads way to 1,275-1,250.
The Nasdaq was down a point and closed at 2,760 but made another “lower, low” after falling to 2,733. We have outlined 2,700-2,650 as the bears next near-term target area.
There are a few major earnings reports we will cover today but let’s focus on Google (GOOG, $578.51, up $2.23) which announced their numbers after the close yesterday. The company was expected to earn $8.11 but profits came in at $8.08 a share.
Revenue surged 27% to $8.6 billion but after commissions to its ad partners, Google’s revenue came in at $6.54 billion. This was still ahead of analysts’ estimates for revenue of $6.33 billion but expenses have ballooned at the company which is on a hiring spree and included a sweet 10% raise the company gave to ALL its employees at the beginning of the year.
Google has its fingers in a lot of pies so it makes sense that the company wants to attain the best and brightest workers to grow their business but Wall Street is impatient.
We said last night shares would be at $600 or $550 in after-hours and they were. Although it’s only a 5% move, the headline will be Google is down $30 at the open.
Futures are pointing towards a flat start this morning. The Dow futures are lower by 2 points t o 12,226 while the S&P 500 futures are up a fraction to 1,310. The Nasdaq 100 futures are down 2 points to 2,298.
We have added some new names to our Watch List and we may release a trade today for either our Daily newsletter or Weekly Wrap. If so, expect a Trade Alert before noon and after 10am. Subscribers, check the Members Area for the updates.
Tags: call option trades, chicken trades, GOOG, momentum options, Momentum stocks, options trading course, put options, stock market options, stocks that trade weekly options, strangle option trades, weekly options
Posted in Google, Hot Stocks, Market Analysis | Comments Off
Thursday, April 14th, 2011
1:25pm (EST)
It’s all about the notes…
We have been busy today, folks, and there are a lot of good stories to talk about so we are going to be quick because we have a lot to go over in our Members Area.
The bears dominated the early action this morning but the bulls have fought back as we head towards the second half of trading.
The Dow is down 13 points to 12,257 while the S&P is off by 3 points to 1,311. The Nasdaq is lower by 14 points to 2,747.
Google (GOOG, $577.00, up $0.72) announces earnings after the bell. We will be listening to the company’s conference call with a Bob Segar classic in the background…Turn the Page. All eyes will be on the company’s CEO, Larry Page, who recently took back the gig to run Google.
Google doesn’t make the dramatic moves like past years after posting their numbers but this time could be different. If we had to guess, we think shares hit $600 or trade down to $550 in after-hours trading.
We will be back in the morning with a full update.
Tags: call option trades, chicken trades, GOOG, momentum options, Momentum stocks, options trading course, put options, stock market options, stocks that trade weekly options, strangle option trades, weekly options
Posted in Google | Comments Off
Friday, February 4th, 2011
1:05pm (EST)
We often get asked why we don’t recommend options on stocks like Apple (AAPL, $345.21, up $1.77), Google (GOOG, $609.59, down $0.56) or IBM (IBM, $163.46, down $0.07). These stocks show tremendous price action and there are numerous, other, momentum stocks we do follow but shy away from trading options on.
Trust us, we would love to trade options on the “high-flyers” and we have in the past and do from time to time but one thing these companies all have in common is that their shares trade in the triple-digits. This means option premiums are expensive and instead of buying options that are $1, you are paying $5, or even $10 for a near-term slightly out-of-the-money call or put. So, if you like to buy 10 contracts for every trade then instead of spending $1,000, you are spending $10,000. Big difference.
We like to use 5% moves in a stock to make 100% on our option trades and it is a lot easier doing it on stocks that are under $100.
To give you an example, Google call options are/were very popular for years after the company became public. Our editor-in-chief, Rick Rouse, use to recommend these types of trades back in the day and here is a breakdown of one of his trades.
In October 2005, Google was just under $300 a share heading into earnings and of course, they knocked the cover off the ball as they were smashing estimates quarter after quarter back then. The November 310 call options were at $10 when he profiled the trade and by mid-November the stock was at $400. The options were at $90 and the return was 800%.
You could also buy just 1 option contract on the higher priced stocks but most of the times the bid/ask is wide enough to drive a tank through and volume is light. By playing options on stocks under $100 there is more liquidity and closer strike prices to where the stock is currently trading at.
Although we do occasionally play options on the high-flyers, we were glad to see Freeport-McMoRan (FCX, $56.89, up $0.63) do a 2-for1 stock split this week. We love playing this name and you will see over the years we have used calls AND puts when it comes to trading Freeport. It just depends on the trend.
While it is so true that stocks splits don’t mean a thing - instead of owning 50 shares of a $100 stock, you now own 100 shares of a $50 stock on a 2-for-1 – stock splits are helpful when it comes to playing options.
Freeport has become a pure-play on copper (and gold to a degree) and has just become another candidate for our Watch List. We aren’t profiling any options just yet because we want to do a little chart work over the weekend but you can bet our subscribers will be seeing this name in the future. Now, if we could only get Apple or Google to do a 10-for-1 stock-split.
Next week should be busy and we have few high-profile earnings announcements we are watching. Cisco Systems (CSCO, $22.05, up $0.14) and Walt Disney (DIS, $40.52, up $0.02) will report earnings, as well as Akamai Technologies (AKAM, $47.84, down $0.27) and Advanced Auto Parts (AAP, $63.72, up $1.24) just to name a few.
We are also working with a new auto-trading partner, Stifel-Nicolaus, and we will be posting more information in the coming weeks on how you can sign up through our website to have our option recommendations filled for you automatically. For those of you that want a head start, go here.
We are excited to bring them on board and we are working with a few other partners (OX) to cover some of the other brokerage firms our subscribers use. If you have a request, please let us know and we will look into it.
As we head to press, the market is mixed but is showing signs of moving higher into the closing bell. The Dow is down 3 points to 12,059 while the S&P 500 is off less than a point to 1,306. The Nasdaq is higher by 6 points to 2,760.
We released 2 new trades earlier today and we are closing another one to lock in profits. This brings our track record for 2011 to 10-out-of-11 winning trades with 3 triple-digit winners! If you wanna see the results, trade by trade with exact entry and exit prices and on what day they were opened and closed, email us.
We will be back on Sunday night with the Weekly Wrap. Until then, have a great weekend!
Tags: best option trader, best trading signals, call options, chicken trade, Covered Calls, financial options advice, momentum options, Momentum stocks, momentum trading, option mentoring, option signals, option trading, options broker, options newsletter, put options, stock broker, strangle option trade, winning option trades
Posted in Google, Hot Stocks | Comments Off
Friday, January 21st, 2011
9:00am (EST)
The Dow spent much of Thursday in negative territory and traded to a low of 11,744 before rebounding late in the afternoon to recoup most of its losses. The index finished with a loss of 3 points and closed at 11,822 after trading up to 11,845.
The S&P 500 slipped 2 points and settled at 1,280 after trading down to 1,271. Like the Dow, the index made it into positive territory late in the day and traded up to 1,296.
Meanwhile, the Nasdaq was never close to sniffing green as the index stayed in the red all day long. Tech hit a low of 2,686 before closing down 21 points at 2,704. The index is right at its 20-day moving average so watch the 2,700 level today.
Futures are pointing toward a higher open this morning thanks in part to Google (GOOG, $626.77, down $4.98) which reported a blowout quarter. The company announced profits of $2.5 billion, or $7.81 a share, versus $2 billion, or $6.13 a share, in the year earlier quarter.
Excluding stock-compensation charges, Google numbers really came in at $8.75 (a share) which was ahead of analyst’s estimates for $8.06. Revenue surged over 25% to $8.44 billion, up from $6.67 billion, and ahead of expectations.
In a surprising move, the company also switched up its top brass as co-founder, Larry Page, will be the new CEO and takes over for Eric Schmidt who will become Executive Chairman.
As we head to press, here is a look at the futures: Dow (+42); S&P 500 (+7), Nasdaq 100 (+15). We will probably release a trade shortly after the open so stay close to you email inbox.
Tags: call options, GOOG, Google's earnings, momentum options, Momentum stocks, NASDAQ: GOOG, option signals
Posted in Earnings, Google | Comments Off
Friday, October 15th, 2010
1:20pm (EST)
Although the futures were pointing towards a higher open , you could almost feel the nervousness in the bulls as Ben Bernanke spoke this morning before the market opened. A lot has been riding on the real “Big Ben” as he tries to quarterback the economy into the endzone and if he could make interest rates below 0% to where the government pays us to borrow money, he would.
 Daily chart of support and resistance for AAPL. We will save our long-term comments on how he is driving down the American dollar but at some point, the printing presses can’t run forever.
In any event, Bernanke reiterated the central bank is ready to do more to stimulate the sluggish economy and his comments were the latest confirmation the central bank is about to ramp up its purchase of Treasury bonds to spark growth. We wouldn’t be surprised if it were Monday. No wonder our assessment of government economic policies have fallen to the lowest level since Obama took office.
Bernanke’s comments helped the futures strengthen and better-than-expected economic news led to a decent open. Retail sales continue to surprise as they rose 0.6% month-over-month in September. Wall Street was expecting a 0.5% increase. The Empire State Manufacturing Index rose to 15.73 in September, compared to estimates of 8.0. The consumer price index (CPI) rose 0.1% month-over-month in September but fell short for estimate of 0.2%. Excluding food and energy, the CPI was unchanged last month.
Business inventories increased 0.6% in August which was better than expectations for a 0.4% gain. And finally, the Reuters/University of Michigan consumer sentiment index for October came in at 67.9, versus the consensus estimate of 69.0.
However, the Financial stocks are getting whacked again and we continue to say they will need to rebound and get healthy before the bulls can push through the April highs and start a real run at higher levels. It was just 3 years ago this month the Dow was at 14,000…
The Dow managed to open higher and made its way to a high of 11,141 but sold-off after some of the economic news hit. The index then traded to a low of 11,010 and as you can see in the 130 point swing, volatility is picking up. The index continues to test our 11,150 target and a close above this level will have the bulls feeling good over the weekend. Currently, the Dow is down 40 points to 11,054.
The S&P 500 is staying within our 1,170-1,175 range and is flat at 1,174. A close above 1,175 today should lead to a test of 1,200 next week so we are watching this level like a hawk.
The Nasdaq traded above our target of 2,450 yesterday but didn’t close there but has broken through this level on the heels of Google’s (GOOG, $$599.93, up $59.00) blowout quarter. The index is trading at 2,458 (up 23 points) and a close above our target should lead to a push towards 2,500. However, we said the other day the Nasdaq could see 2,600 and the index has a good chance of doing that on Monday if Apple (AAPL, $310.00, up $7.69) can once again impress Wall Street.
The company reports earnings on Monday and it could shape the direction of Tech over the next few weeks. Apple should report great earnings but expectations are high. The only problem that worries us is the shortage of supply on some of the components used to make the iPhone and iPad. However, if Google can do it, we are sure Apple can follow suit.
One analyst came out today with a $500 price target for shares of Apple.
As far as Google, some traders took a chance on the October 600 calls (GOOG101016C00600000, $1.00, up $0.60) before the close yesterday as they were only selling for 40 cents. In our training video for our options manual “How to Trade Options on Momentum Stocks”, our editor-in-chief went over how to look at playing Google’s earnings.
Although there was no recommendation, this type of trading out-of-the-money calls (or puts) are like going to a casino. Sometimes they hit, sometimes they don’t but you have to act fast and you have to know what you are doing. The October 600 calls are currently at $1 but they traded to a high of $5.90 at the opening bell!
Had you bought 10 contracts of the Google 600’s, it would have cost you $400. Imagine this morning waking up to a gain of $5,500! Or, if we expand it for the high rollers, a $4,000 investment would have been worth $55,000. The ROI (return on investment) would have been 1,275%.
Now this is important, since October options expire today, the battle ground will be if Google stays above or below $600 a share. If the shares stay below $600, these options will expire worthless and as we go into the close today, these options could trade wildly. The key was to get in yesterday before the close and out at the open today.
We show you how to find these trades and we have played them in the past with the likes of Priceline.com (PCLN, $355.20, up $6.14), Nike (NKE, $82.27, up $0.50) and others but we didn’t feel like going to Vegas this week. However, we are going over this weekend as we have a trade for Monday.
If you are serious about taking your trading to another level and want to learn how to find trades like this, then you should seriously consider a purchasing to our trading manual. We will be doing another video this weekend to go over other types of trades and we look forward to you joining us!
For October, we are also offering a free 1-month subscription to our exclusive Members Area if you purchase the option trading manual. You can get a peak at what’s inside by clicking on the hot, shiny yellow button to your left on the website.
We have some last minute updates before the weekend which is why we are running a little late today. We are swinging the bat on an earnings trade for Monday and wanted to do a little more research. Subscribers, check the Members Area for the NEW TRADE!
We will be back Sunday night with the Weekly Wrap and until then, have a good weekend!
Tags: Apple (AAPL), Google (GOOG), options trading course
Posted in Apple, Google | Comments Off
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