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Thursday, September 1st, 2011
8:45am (EST)
The bulls ended August with a win as they extended their streak to four straight sessions and 7-out-of-8 after saying goodbye to a nasty month. Wednesday’s action was strong at the open but the bull train lost some steam when news broke that AT&T’s (T, $28.48, down $1.14) planned merger with T-Mobile USA isn’t going to happen, Captain.
The news sent shares of AT&T tumbling and weighed heavy on the market for the rest of the day as it slipped into negative territory by late afternoon. However, the bulls found their footing in the final hour and made one last push into the close to come out on top.
The Dow gained 54 points, or 0.5%, to finish at 11,613. The index closed above our 11,600 target and traded to a high of 11,712. The next wave of resistance before flirtation with 12,000 will come in at 11,750-11,800. A pullback from here could lead to a test back down to 11,350. For the month, the Dow was down 4.4%, but is now showing a slight gain of 0.3% for the year, or 36 points.
The S&P 500 added 6 points, or 0.5%, and ended at 1,219. We were looking for a close above 1,225 after the index kissed 1,230 but we fell just short. Normally this would be close enough for government work but this is the stock market which is a little harder to figure out. Joking aside, we said the S&P could run to 1,250 if this level were cleared but yesterday’s action was funky and there is still risk of a pullback to 1,200 if current levels don’t hold. For the month, the S&P fell 5.7% which represented its worst showing in 3 decades. The back to even point for the index is 1,257.
The Nasdaq chipped-in with a 3 point pop to settle at 2,579. Tech traded to a high of 2,611 and we said to watch for the battle at 2,600. The bulls are still pushing for 2,625-2,650 if cleared while support comes in at 2,550-2,525. As for August, the Nasdaq dropped 6.4% and is down about 75 points for 2011.
Futures are pointing towards a slightly lower open this morning after the update on Initial Claims which fell 12,000 to 409,000. The 4-week moving average rose by 1,750 to 410,250. Continuing Claims came in at 3.735 million versus 3.753 million the week before.
Dow futures are down 6 points to 11,597 while S&P futures are off by 2 points to 1,216. Nasdaq futures are up 2 points to 2,243.
Subscribers check the Members Area for the updates.
Tags: About options trading, option trading, stock and option, stock exchange, stock to buy, stock trading, trade online, trading futures, trading online, trading system, what are stock options, what is a call, what is option trading
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Monday, August 15th, 2011
1:40pm (EST)
The bulls are looking to extend their winning streak to three straight sessions and have a pretty good lead heading into the second half of trading. Futures were pointing towards a higher open this morning despite some disappointing economic data ahead of the bell.
The Empire State Manufacturing Index showed further contraction by falling to -7.7 from -3.8 in July. Wall Street was looking for an improvement to -0.4. Elsewhere, the National Association of Home Builders reported the August Housing Market Index came in at 15, which was in-line with expectations.
The bears have done a lot of technical damage over the past few weeks but the bulls are chipping away at resistance and looking for bargains. Volatility has been subdued but we doubt we have seen the last of it.
There are a lot of stocks trading at discounts and we knew there might be some M&A activity moving forward. Companies have been hoarding cash and this might be the perfect environment to go shopping if we have indeed seen a bottom in the market.
Google (GOOG, $553.50, down $10.27) unlocked its coffers and shelled out $12.5 billion to buy Motorola Mobility (MMI, $38.22, up $13.75) for $40 a share. It was a deal Google had to do to protect itself from ongoing legal challenges and will give the company access to Motorola’s 17,000 patents related to wireless technology.
As far as the market is concerned, here is how we look:
The Dow is up 153 points to 11,422 and is at its highs for the day. We were looking for a run past 11,350 today and if this level holds into the close, the bulls will target 11,600 next.
The S&P is higher by 16 points to 1,195 and has traded to a high of 1,199.60. The index is having trouble with the 1,200 level which we said would be resistance. If cleared, look for a run to 1,225, possibly 1,250.
The Nasdaq is advancing 19 points to 2,527 but is the weakest of the three indexes. The index has traded up to 2,546 and we are looking for a close above 2,550 if the bulls are going to make a run back to 2,600.
The final hour of trading could be interesting as traders take positions ahead of tomorrow’s meeting between officials from France and Germany, which is in a no-win situation. Germany can’t afford to let the euro collapse because their exports would suffer. They are one of the stronger countries that continue to support the weak and everyone is expecting smooth, good news. We aren’t so sure.
We will be back in the morning with our next update but we have to go for now as we have a number of trades to cover. Subscribers, check the Members Area for the updates.
Tags: About options trading, option trading, stock and option, stock exchange, stock to buy, stock trading, trade online, trading futures, trading online, trading system, what are stock options, what is a call, what is option trading
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Monday, June 20th, 2011
8:35am (EST)
The bulls finally got the bears off their back after scoring their first weekly win in 7 weeks as the market gained just enough on Friday to end the losing streak. However, it must be noted that Tech finished the week in negative territory so it wasn’t a clean sweep by the bulls.
We said on Friday the bulls face a crucial test as they needed to overtake a few key resistance areas and the Dow and the S&P 500 managed to do just that. The Nasdaq, on the other hand, made a brief trip into positive territory which was enough to claim a “W” but remained in a downtrend all day after the initial pop in the morning. Friday’s slight gains were fueled on hopes Greece gets a bailout but late in the day there were reports surfacing that Moody’s (MCO, $36.33, down $1.94) was putting Italy’s debt rating on review for a possible downgrade.
We will save the Moody’s story for another day but it’s hard to believe shares have managed to climb 50% this year and are up nearly 100% off their 52-week low of $19-and change.
The Dow gained 42 points on Friday and finished at 12,004 after trading to a high of 12,072 intraday. The index managed to hold the 12,000 level which we outlined as resistance followed by 12,200. If there is a break above 12,200 then the bulls will try to push 12,350 again. The bears will target 11,800 and then 11,600 which represents the March lows. For the week, the Blue-Chips added 50 points, or 0.4%, and is up 3.7% YTD.
The S&P 500 gained 4 points to settle at 1,271.50 after kissing a high of 1,279. We were looking for 1,275 to hold for a possible push to 1,300 but this area has been trouble. If there is a rally past 1,300 then 1,315-1,325 would come into play but the bears seem determined to test 1,250 over the near-term. The index started the week at 1,270 and gained a point for the week. For the year, the S&P is still up 1.1%.
The Nasdaq fell 7 points and closed at 2,616 after reaching a peak of 2,648 but failed the 2,650 level once again. This is an important area of resistance as the bulls attempt a run back to 2,700, but more importantly, they will need to hold 2,600. If this level of support is breached then it will be a quick trip down to 2,550-2,500. For the week, the Nasdaq fell 27 points, or 1%, and recorded it 5th-straight weekly loss. For 2011, Tech is down 1.4%.
Last week, we mentioned the 10% decline in the Russell 2000 from its 2011 perch of 868. The index managed to close slightly higher on Friday at 781.75 (up 0.21) and for the week (up 3). If a turnaround rally is to take place, this index will need to challenge the 800 level again. If not, the small-caps could be headed to 750, if 775 is penetrated.
The other interesting development that took place is the VIX which jumped over 20 last Thursday. The S&P 500 Volatility Index (^VIX, 21.85, down 0.88) traded to a high of 24.65 on Friday and we said a jump to 30 could be in the cards on more selling pressure. A break above 30 could put the market in a freefall.
As we look ahead to this week, we said on Friday that the week after June Quadruple Witching expiration has not been kind to the bulls over the past 2 decades. The market has dropped 1.2%, on average, during this time frame with the Dow falling 11 straight years and 18 out of the last 20. Those aren’t good odds (90% chance) for going long but anything can happen and we wouldn’t be surprised to see a rally back to resistance with so many people betting on a correction.
We could see some extra volatility this week as debt concerns around the globe continue to take center stage. Here at home, expect more water-cooler talk about QE3 with QE2 set to finish by the end of the month. We aren’t sure what could be up Ben Bernanke’s sleeve because a kitchen sink won’t fit and the money machine is running out of ink but he will come up with something.
This could give the market a lift or it could work against it. Also, we are entering a period where companies usually “pre-announce” if they are going to miss earnings which begins in July with the start of 2Q’s numbers. In any event, we expect the recent volatility to continue but we are in good shape. We have plenty of room in our portfolio for new trades and we expect to be busy this week.
Futures were weak last night and got progressively worse before we hit the rack on news that Europe has put Greece on the backburner until July. The country is looking for another $12 billion euro as part of the $110 billion euro bailout package agreed upon but must make another $28 billion euro more in spending cuts by the end of June.
As such, futures have remained weak throughout the morning. Dow futures are down 42 points to 11,896 while the S&P futures are lower by 5 points to 1,261. Nasdaq futures are off 10 points to 2,180.
We have a lot to cover this morning, including a ton of charts and some new trade ideas. We may be busy today so look for Trade Alerts. Subscribers, check the Members Area for the updates.
Tags: call options, futures options, high beta stocks, Hot stocks, momentum options, Momentum stocks, option market, option tips, options, options mentoring, options trading course, Research In Motion earnings miss, RIMM, stock market options, weekly options, what are options
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Wednesday, June 15th, 2011
8:45am (EST)
Well, we knew it was coming.
After taking body blows for much of June, the bulls finally landed a haymaker on the bears as the market rallied over 1% on Tuesday. There was a mixture of good and not-so-good news which was found encouraging and already has Wall Street thinking “soft landing” instead of “double-dip recession” based on the latest economic reports.
My, my, my, how things change in a week…much less 48 hours.
While there was some better-than-expected news our outlook remains the same. Volatility. Good news, bad news, mixed news, earnings misses, inflation, deflation, what China is doing, what Greece isn’t doing – it all equals volatility.
The Dow managed a triple-digit gain for the first time since late May by adding 123 points, or 1%, to close at 12,076. The index traded to a high of 12,120 which was right near the middle of our upside targets of 12,000-12,200. While support remains at 11,800, the bulls will target 12,350 if our top-end target is cleared.
The S&P surged a sweet 16 points, or 1.3%, to finish at 1,288 after kissing 1,292 intraday. The index easily sailed through 1,275 and faces a tough test at 1,300. If cleared, the next area could be a run back to 1,325 but 1,250 is lurking if the bulls can’t hold the momentum.
The Nasdaq was on fire as Tech torched the bears for nearly 40 points, or 1.5%, to settle at 2,678. We mentioned 2,675-2,700 as resistance so watch the top of this range for a breakout. The bears will try to keep hold the fort down and are still eyeing 2,600-2,550.
The snap-back rally can be attributed to lower food and gas prices (and China). Yesterday’s wholesale numbers showed a decline of 1.4% overall in food and gas is down to $3.70 a gallon after surging to $4, on average, in May. So, although yesterday’s numbers were weak, the undertones are improving, at least for this week. However, we can’t go “all-in” with the bulls until a sustainable rally in the Financial stocks happens AND job growth picks up which we will find out on Thursday.
We have used a mixture of call and puts since the end of April which is when we called for a pause in the rally. We knew May would be a down month and we figured June would be volatile so here we are. Our current strategy seems is working well so let’s stick with it. There are stocks still making 52-week highs and ones that are breaking down like rented mules and what we said in early May is that this would be a “stock-pickers” market.
Futures are pointing towards a nasty open after the market got some horrible economic news. Dow futures are down 108 to 11,910 while the S&P futures are off 12 to 1,273. Nasdaq futures are lower by 20 points to 2,226.
Subscribers, check the Members Area for the current updates.
Tags: call options, futures options, high beta stocks, Hot stocks, momentum options, Momentum stocks, option market, option tips, options, options mentoring, options trading course, stock market options, weekly options, what are options
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Tuesday, May 10th, 2011
9:00am (EST)
The bulls passed a key test on Friday and Monday as they got wins on both days following yesterday’s pop. The market was flat for much of the morning session although commodities were rebounding following last week’s selloff. Oil, gold and silver all traded higher despite an early rally in the dollar which eventually closed lower for the day. There was a little activity in the M&A sector and Energy stocks were strong which provided enough leadership to keep the bears at bay.
Oil fell below $100 last week but rallied over 5% to close at $102.50 a barrel. Meanwhile, gas prices have hit $4 a gallon, on average in the U.S., and are approaching levels from a few years ago.
Gold had dropped below $1,500 last Friday but finished above this level at $1,503 an ounce. Silver surged 5% to close over $37 an ounce.
Nvidia (NVDA, $19.75, up $0.43) reached into its coffers and flashed $367 million in front of privately held Icera’s face to get a deal done. It was a great acquisition for the company as they may a bigger push into the 3G and 4G mobile market. The deal is expected to close within a month and should start to payoff in the back half of 2012.
Despite the lack of economic news and major earnings announcements, the Dow drifted higher to finish with a gain of 46 points to 12,684. The index traded to a high of 12,722 with Alcoa (AA, $17.53, up $0.38) leading the way with a 2% pop.
The S&P 500 added 6 points and closed at 1,346 but ran into the 1,350 roadblock once again. The index reached an intraday high of 1,349.44 and was just enough to keep the technical picture blurry for another day. We mentioned 1,350 as a key battle ground for the push back towards 1,375-1,400 or the breakdown to 1,325-1,300.
The Nasdaq managed a 15 point advance and settled at 2,843. We mentioned in our Monday morning update to watch for 2,850 which is exactly where the bulls backed off. Tech has shown some signs of breaking out but the bulls are having trouble with this area on their push to 3,000.
In M&A news this morning, Microsoft (MSFT, $25.83, down $0.04) has made a pitch to buy Skype for $8.5 billion in cash. It is the largest deal ever for Microsoft in its attempt to keep up with Apple and Google but we think they overpaid.
eBay (EBAY, $33.12, up $0.40) paid $2.6 billion for Skype back in 2005 and sold a majority of its stake for $1.9 billion in cash in a leveraged buyout. However, the company still owns 30% of Skype which it listed on its books for $620 million. With Microsoft’s bid, that stake has just ballooned to $2 billion which is pushing shares of eBay near its 52-week highs this morning.
Futures are pointing towards a strong start this morning. Dow futures are higher by 45 points; S&P futures are up 6 points; Nasdaq futures are up a dozen. Subscribers, check the Members Area for the trade updates.
Tags: AA, call options, eBay, high beta stocks, Hot stocks, momentum options, Momentum stocks, MSFT, NASDAQ: EBAY, NVDA, NYSE: AA, option tips, options trading course, Skype, stock market options, strangle option trades, weekly options
Posted in Hot Stocks, Market Commentary, Mergers and Acquisitions | Comments Off
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Streaking Bulls Face Scary September
Thursday, September 1st, 2011
8:45am (EST)
The bulls ended August with a win as they extended their streak to four straight sessions and 7-out-of-8 after saying goodbye to a nasty month. Wednesday’s action was strong at the open but the bull train lost some steam when news broke that AT&T’s (T, $28.48, down $1.14) planned merger with T-Mobile USA isn’t going to happen, Captain.
The news sent shares of AT&T tumbling and weighed heavy on the market for the rest of the day as it slipped into negative territory by late afternoon. However, the bulls found their footing in the final hour and made one last push into the close to come out on top.
The Dow gained 54 points, or 0.5%, to finish at 11,613. The index closed above our 11,600 target and traded to a high of 11,712. The next wave of resistance before flirtation with 12,000 will come in at 11,750-11,800. A pullback from here could lead to a test back down to 11,350. For the month, the Dow was down 4.4%, but is now showing a slight gain of 0.3% for the year, or 36 points.
The S&P 500 added 6 points, or 0.5%, and ended at 1,219. We were looking for a close above 1,225 after the index kissed 1,230 but we fell just short. Normally this would be close enough for government work but this is the stock market which is a little harder to figure out. Joking aside, we said the S&P could run to 1,250 if this level were cleared but yesterday’s action was funky and there is still risk of a pullback to 1,200 if current levels don’t hold. For the month, the S&P fell 5.7% which represented its worst showing in 3 decades. The back to even point for the index is 1,257.
The Nasdaq chipped-in with a 3 point pop to settle at 2,579. Tech traded to a high of 2,611 and we said to watch for the battle at 2,600. The bulls are still pushing for 2,625-2,650 if cleared while support comes in at 2,550-2,525. As for August, the Nasdaq dropped 6.4% and is down about 75 points for 2011.
Futures are pointing towards a slightly lower open this morning after the update on Initial Claims which fell 12,000 to 409,000. The 4-week moving average rose by 1,750 to 410,250. Continuing Claims came in at 3.735 million versus 3.753 million the week before.
Dow futures are down 6 points to 11,597 while S&P futures are off by 2 points to 1,216. Nasdaq futures are up 2 points to 2,243.
Subscribers check the Members Area for the updates.
Tags: About options trading, option trading, stock and option, stock exchange, stock to buy, stock trading, trade online, trading futures, trading online, trading system, what are stock options, what is a call, what is option trading
Posted in Economic News, Market Commentary, Mergers and Acquisitions | Comments Off