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Wednesday, December 28th, 2011
12:20pm (EST)
Now we know why we learned World History in high school.
After a decent start, the market is pulling back on fears of a possible US conflict with Iran. Tensions have been rising for a few weeks over Iran’s threat to shut down the Strait of Hormuz which happens to run 15 million barrels a day of oil through its waters, or one-fifth of the global production.
The country has been moved to the top of the global sanctions list due to its thirst for nuclear weapons and said shutting down the Strait would be easier than drinking a glass of H20. The US fired back (possible future pun intended) by saying no way Jose and will take action if Iran attempts to block the 4-mile width passage.
The US has been trying to, ah what’s a good word, “conform” Iran for decades and this threat of war shouldn’t be taken lightly. We aren’t worried about the outcome of who would “win” a war because it is never a good thing but the fight would be swift and Iran would suffer terribly. We are more worried about Iran’s hunger to build a nuclear weapon and the fact that oil could double to $200 if shots are fired.
Let’s hope it doesn’t come to battle and cooler heads prevail but this could get ugly.
As far as the impact on the market, the bears are pushing support after the bulls ran the indexes higher at the open. However, once the US/ Iran news started making the rounds on the business channels, stocks pulled back. War doesn’t necessarily mean the market will automatically go lower and there our other countries who share our same interest in keeping the Strait open.
As we head to press, the market is near its lows. The Dow is down 133 points to 12,157 while the S&P 500 is off by 14 points to 1,250. Both indexes have slipped below their 200-day moving averages. The Nasdaq is showing a decline of 30 points to 2,595.
We have some more profits to take in case the pullback gets worse but we are looking for support to hold. Subscribers, check the Members Area for the updates.
Tags: Dow, Nasdaq, S&P 500, stock market war worries, US+Iran conflict
Posted in Market Analysis, Market Commentary, Oil | Comments Off
Monday, November 28th, 2011
9:00 (EST)
The market continued its recent slide as the bears had their best bull feast in nearly 80 years as Wall Street fell 5% last week. The recent selling pressure became much more serious as all of the indexes fell below their 50-day moving averages (MA) with the bears stretching their winning streak to seven-straight sessions.
The headline news read like a Vegas betting parlor as a number of European countries face further risks of defaulting. Germany was the latest country which showed a chink in the armor after trying to raise $6 billion euro but was only able to raise a little over half of it. Spain also went to the well and was successful in its bond auction but the yields came at a hefty price. Italy faces a huge crisis in 2012 if they can’t raise more dough, and they are trying, but it’s costing them an arm-and-leg.
The news here at home continues to come in better-than-expected and this week will be big with a number of month-end reports due out. As far as the charts, they have been stretched which often happens when headline news trumps the technical picture. The bears have clearly had the advantage and at some point there will be a rebound but until Europe can figure out its mess, the market will be held hostage.
The Dow slipped 26 points, or 0.2%, to finish at 11,232 on Friday’s shortened session. We went into the week looking for 11,600 to hold but that level was taken out on Monday. Our next downside targets were 11,400 and then 11,200, which held, but there is risk down to 10,800 this week if current levels don’t hold. If the bulls can get past 11,400 (black line, purple circles) then they could make a run back towards 11,600 and then 12,000 but the news has got to be awfully good. For the week, the Dow dropped 564 points, or 4.8%, and is now down 346 points, or 3% YTD…
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Futures are pointing towards a strong start for today’s session and look like this: Dow (+255), S&P 500 (+34), Nasdaq 100 (+53). We recommended 4 new trades on Friday and after two weeks of being patient and building new positions, hopefully we get the surge we have been expecting. Subscribers, check the Members Area for the updates.
Tags: Dow, Momentum stocks, stock options trading advisors
Posted in Apple, BioTech, China, Commodities, Company Commentary, Covered Calls, Earnings, Economic News, Entertainment Stocks, European Union (EU), Financial Stocks, Futures, Gold, Google, Hot Stocks, IPOs, Market Analysis, Market Commentary, Mergers and Acquisitions, Money Management, Oil, Option Trades, Rick's Account, Sectors, Stock Earnings, strangle option trades, Trade Update, Trading Psychology, Trading Tips, Uncategorized, VIX, Watch Lists, Yahoo / Microsoft | Comments Off
Thursday, August 4th, 2011
12:15pm (EST)
It has been a tale of two different tapes today for a couple of companies which reported earnings after the bell last night.
One of our all-time favorite stocks and some of our biggest option trades, ever, over the years have come from Dendreon (DNDN, $11.54, down $24.30) but we missed the boat on this one. It has been a stock we have followed for years as we watched it grow from Small Town Billy to Big Town Bobby but today Wall Street is kicking the stock to the curb.
Shares are down a whopping 67% after the company reported sales well below analysts’ estimates. The company’s flagship drug, Provenge, did nearly $50 million in sales for the quarter but the Street was looking for $58 million. However, Dendreon also lost $115 million, or 79 cents a share, when estimates were for a loss of 70 cents.
To make matter worse, Dendreon lowered its sales forecast and blamed possible reimbursement issues due to the recent Medicaid uncertainty. The stock has been an easy read technically and we knew once shares fell below $38 in late-July there would be further selling pressure. But not in our wildest dreams did we think shares would be looking at possible single-digits when the market opened this morning.
The stock opened at $12.71 and is at its lows for the day. Those who shorted Dendreon ahead of earnings, or bought put options, are making a mint today. The August 35 puts (DNDN110820P00035000, $22.40, up $20.90) were at $1.50 going into yesterday’s close and there was unusual volume of over 1,000 contracts on these options. Those who took a flyer are up nearly 1,400%!
In other words, a $1,500 investment on 10 contracts yesterday would have been worth a cool $22,400 today. Now you know why options are the most powerful investments on the planet and what makes them so lucrative.
In April, we took a flyer on a Dendreon August call option but we can lay that one to rest.
Elsewhere, we did a featured article on Zipcar (ZIP, $22.90, down $0.19) in our Weekly Wrap this past Sunday and here is a sneak peak, with a chart and our thoughts:
“For the quarter that just ended, Zipcar is expected to post a loss of 23 cents a share on revenue of nearly $60 million when it reports its numbers this Wednesday. For the current quarter, analysts expect the company to improve their loss to just 2 cents a share on revenue of $66 million.
For the current year, losses should come in at 45 cents on revenue of nearly $240 million. However, for 2012, Zipcar is expected to turn a profit of 5 cents a share on revenue of nearly $300 million.
The initial costs of expansion and buying new cars as they grow will need to be monitored by Zipcar but so far it looks as though they are on top of it.
As far as the chart, we would like to see shares come down to $20 which is where strong support lies (black line, orange circles) and where we would look to establish positions. A breakout could occur on better-than-expected numbers above $24 which is current short-term resistance (red line, green circles) after serving as prior support.
Zipcar is a growth story and we will be listening to their conference call after they announce earnings this week to get a better feel for management and their growth plans.” (END)
We liked what we heard last night as Zipcar reported a loss of 17 cents, which was 6 cents better than expectations, had higher revenues than expected, and raised their outlook. However, they need to tighten ship on the expenses.
Shares did not fall to $20, or the “triple-bottom” (orange circles) like we were hoping. Instead, the “double bottom” at $22 held all week. Shares surged to a high of $25.88 at the open but there could be a pullback to $20, especially if $24 continues to act like resistance.
Put Zipcar on your Watch List going forward and we may look at LEAP options down the road if the company continues to improve its losses.
We added a new recommendation today, a put option, in case our downside targets from Wednesday morning are taken out. We could throw some technical jargon at you today – “double bottoms”, “Fibonacci Retracements levels” – but the bottom line is this, anything can happen from here.
Oil is under $90 and is down $3 to $89 today and there is renewed talk of QE3 which helps the bullish case for a bounce. However, the technical and emotional pictures are favoring the bears. Does the market fade or break down like a rented mule? We should find out tomorrow once the all-important jobs numbers are released.
And one more story before we go…
LinkedIn (LNKD, $103.50, down $2.15) reports earnings after the closing bell. Of the five analysts that cover the stock, estimates call for a loss of 3 cents a share, on average. The high estimate has the company earning a profit of 3 cents a share while the loss estimate is as high as 8 cents a share.
We think LinkedIn could move 15%-20% in after-hours tonight and when trading opens on Friday. For the high-rollers out there, we have a strangle option trade we are profiling but the premiums for the options are expensive. We don’t need to make big bets or spit in the wind given the whipsaw action we are seeing but we do think the trade could do really well.
We think shares will move up or down at least $20, maybe $30, and we like this trade a lot but we will probably sit on the sidelines. LinkedIn will explode higher if they report a profit, much the same way Google did when they announced their earnings for the first time after going public. If losses are larger-than-expected then shares could tank to $75 or below.
As we head to press, the Dow is down 303 points to 11,592 while the S&P is getting punished for 36 points and is at 1,223. The Nasdaq is lower by 80 points to 2,613. We have been mentioning these levels over-and-over for the past few weeks so let’s see if they hold. One thing is for certain, as an option trader, you have to love the volatility!
Subscribers – check the Members Area for the updates and we will see the rest of ‘yawl in the morning. One of our current put trades is up 233%…
Tags: dndn, option alerts, option trading, option trading services, options momentum trading, options trading, weekly options trading, ZIP
Posted in Company Commentary, Earnings, Market Analysis, Market Commentary, Oil | Comments Off
Friday, March 4th, 2011
1:00pm (EST)
We were hoping for a better outcome for the bulls but the way futures were acting, we had a feeling today could be flat or down. We said yesterday we would be happy if the market held at current levels following this morning’s unemployment report but it looks like we are headed for support again.
The one thing we keep mentioning is the current “trading range” and we were hoping for a breakout today. This didn’t happen but we are pleased to see support holding to a degree.
The Dow is down by 164 points to 12,092. We were looking for 12,200 to hold but we also realize 12,000 could come into play again. We would do back flips over the weekend if the index can close over 12,100.
The S&P 500 is lower by 17 points to 1,314 and we were looking for 1,325 to hold. There is additional support at 1,300 but it would be nice to see 1,310 hold.
The Nasdaq is off by 28 points to 2,770. We are watching the 2,750 level as key support but 2,700 could come into play if the down drift gets worse into the closing bell. The index has traded to a low of 2,768.
The good news is that the uptrend is still intact but the market will especially react to oil next week as economic news will be light. The talking heads and pros are telling you to take your chips off the table but they have been wrong all year. But there is risk, weekends are always a risk.
Earnings are still winding down from 4Q and year-end results so oil takes center stage once again. Today, black gold is up another $2 to $104 and appears it is going to push $105. If $110 comes into play next week, things could get shaky.
We are living in a fast-paced world so things could get ugly this weekend or the sun will shine early and peace will prevail in Libya. If that were to happen, oil would fall back to $90 and the market will zoom. If we stay in a trading range for another week that would be okay because we are expecting a huge breakout once the tensions ease in the Middle East.
Before we go we want to take a moment to talk about the Weekly Wrap publication which is gaining momentum and getting a lot of attention and coverage. We have hired a couple of powerful writers and they have nailed a number of great stocks since August. Our Covered Call portfolio for the Weekly Wrap is off to a sweet start. One stock we talk about is Spreadtrum Communications (SPRD, $22.89, up $1.27) which we profiled on February 6. Shares are currently up 6% but have traded to a high of $24.20 today.
Here were some of our thoughts a month ago:
“The company, based in Shanghai, China, is one of the leading designer and provider of baseband semiconductors and RF processor solutions for the wireless communications market. With wireless communications surging in China, the company is expected to do well. Sales predictions for smartphones and tables in 2011 are expected to increase by 22% and 262%, respectively, according to one study. Basebands allow cell phones to send massive amounts of data at high speeds from the phone to the cell tower.” (END)
We included some charts and graphs and had this to say about the stock:
“The graphs and the year-over-year chart seem to predict that they will even meet or beat analysts’ inflated earnings expectations. The quarter-over-quarter chart draws a little concern.
With earnings 25 days away, using their slope and expected earnings meet, we would say shares still have more room to run and could hit $30 over the next six months.” (END)
The company reported earnings today which beat expectations.
We are on track to make 7% in a month if this stock is “called away” from us but we hope we can continue to write calls on it. Our Weekly Wrap finds stocks that are undervalued, or “cheap”, or ones that have momentum and is designed for investors who like a little safety when playing options. Folks, 7% might not sound like much in a month but if you earn 7%-8% a month for a year, you will do extremely well.
We also want to point out this would have been a GREAT earnings trade for those of you who have purchased our option trading course, How to Trade Options on Momentum Stocks. We have done numerous videos on how to do an “earnings option trade” and these types of plays can make you 100% or more in a day…if you a right.
In our trading manual and videos, we show you how to research these types of trades and how to find them. We also show you how to do the math and figure out how much you can make or lose on a trade.
Based on our Weekly Wrap information, you could have bought the Spreadtrum Communications March 24 calls (SPRD110319C00024000, $0.60, flat) yesterday for 60 cents and sold them at the open this morning for $1.20. These are risky strategies of course because you really have to be quick with your trading but you also could have gone out to the April options. There may still be a trade there and it is one we will examine over the weekend for our current subscribers.
We bring this all up because we have a lot of new subscribers and we really want you to have a copy of our option trading manual and access to our ongoing, monthly videos. The option course is priced at $599 but will be included with any 1-year subscription you purchase and is shipped at no charge directly to your doorstep.
We have the cheapest and easiest to understand option trading course on the internet and it is getting rave reviews. It is helping people find their own triple-digit trades and the proof is in the pudding (and our Track Records).
We do not advertize this deal but we continue to get requests for it. We have just printed a fresh batch of copies for the course which includes our Momentum Stocks Watch List. This manual covers dozens of sectors and profiles over 600 companies and what moves these stocks.
Both are great values and we hope you take us up on our offer.
We will be back Sunday night but we still feel we are going to get one more big push to the upside as long as support holds. The final hour of trading should be exciting!
Tags: best option trader, best trading signals, call options, chicken trade, Covered Calls, financial options advice, momentum options, Momentum stocks, option quotes, option signals, Option Trades, option trading, options broker, options mentoring, options newsletter, options prices, put options, stock broker, stock price, stock quotes, strangle option trade, winning option trades
Posted in Oil, Option Trades | Comments Off
Tuesday, March 1st, 2011
1:15pm (EST)
The market has been choppy today after a positive start but is trading at session lows as oil prices move higher. There are other factors in play but oil is up $2, to $99 a barrel, and is approaching the $100 level which is making traders nervous.
Ben Bernanke is doing damage control in front of the Senate Banking Committee and admitted rising oil prices could hurt the economy but said it would take a prolonged increase in oil prices before it would pose a risk to the recovery. He also predicted only a temporary increase in inflation and said he still expected the economy to grow this year.
The Dow is currently down 70 points to 12,156 while the S&P 500 is off by 10 points to 1,317. The Nasdaq is lower by 25 points to 2,757.
Goldman Sachs (GS, $163.00, down $0.78) is taking a PR hit after the SEC filed suit against one of its former Board Members, regarding allegations of insider trading. The SEC also said Las Vegas Sands (LVS, $43.31, down $3.33) has been subpoenaed and is being invested for some shenanigans as well.
The bulls seem to be holding support and we are looking for Dow 12,100; S&P 1,300 and Nasdaq 2,750 to hold today or at least get a bounce higher from current levels.
Before we roll out, we wanted to talk about a recent stock-split that has made one of favorite stocks cheaper. A lot of “pros” say stock-splits don’t mean much except that you have more shares of company as your original investment doesn’t change. While this is true, we disagree to a degree and love the recent Potash (POT, $60.86, down $0.74) 3-for-1 split.
Shares were approaching $200 which made near-term options expensive to trade (we usually like to recommend options for $1.50 and lower) but the high premiums have kept us on the sidelines. We aren’t ready to trade Potash, yet, but it has been a favorite of ours in the past.
We will be back in the morning with our next update. Current subscribers, check the Members Area for the trade updates.
Tags: best option trader, call options, momentum options, Momentum stocks, option signals, option trading, options mentoring, options newsletter, put options, winning option trades
Posted in Market Analysis, Oil, Trading Tips | Comments Off
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Wednesday, December 28th, 2011
12:20pm (EST)
Now we know why we learned World History in high school.
After a decent start, the market is pulling back on fears of a possible US conflict with Iran. Tensions have been rising for a few weeks over Iran’s threat to shut down the Strait of Hormuz which happens to run 15 million barrels a day of oil through its waters, or one-fifth of the global production.
The country has been moved to the top of the global sanctions list due to its thirst for nuclear weapons and said shutting down the Strait would be easier than drinking a glass of H20. The US fired back (possible future pun intended) by saying no way Jose and will take action if Iran attempts to block the 4-mile width passage.
The US has been trying to, ah what’s a good word, “conform” Iran for decades and this threat of war shouldn’t be taken lightly. We aren’t worried about the outcome of who would “win” a war because it is never a good thing but the fight would be swift and Iran would suffer terribly. We are more worried about Iran’s hunger to build a nuclear weapon and the fact that oil could double to $200 if shots are fired.
Let’s hope it doesn’t come to battle and cooler heads prevail but this could get ugly.
As far as the impact on the market, the bears are pushing support after the bulls ran the indexes higher at the open. However, once the US/ Iran news started making the rounds on the business channels, stocks pulled back. War doesn’t necessarily mean the market will automatically go lower and there our other countries who share our same interest in keeping the Strait open.
As we head to press, the market is near its lows. The Dow is down 133 points to 12,157 while the S&P 500 is off by 14 points to 1,250. Both indexes have slipped below their 200-day moving averages. The Nasdaq is showing a decline of 30 points to 2,595.
We have some more profits to take in case the pullback gets worse but we are looking for support to hold. Subscribers, check the Members Area for the updates.
Tags: Dow, Nasdaq, S&P 500, stock market war worries, US+Iran conflict
Posted in Market Analysis, Market Commentary, Oil | Comments Off