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Thursday, June 17th, 2010
1:00pm (EST)
The market has been in negative territory for much of the day as BP’s (BP, $31.92, up $0.07) CEO, Tony Hayward, is the latest suit-and-tie to sit on Capital Hill’s hot seat. Also weighing on the market, were a couple of disappointing economic reports as the bears try to get back some momentum that they have lost over the past week.
If BP’s CEO is going to be judged on facial reactions and body language then he will most likely receive an “F”. As far as grading the latest jobless claims report, you would have it give it an “F” as well.
Initial claims for jobless benefits rose unexpectedly by 12,000 to 472,000. This was the highest level in a month after three straight weeks of declines. The pencil pushers were looking for another drop but the labor market is still struggling to create new jobs and companies seem reluctant to hire.
A negative report for Regional Manufacturing also hit the bulls as manufacturing activity dropped to 8 from 21.4 the month before.
As a result, the Dow is down 50 points to 10,358 while the S&P 500 is lower by 5 points to 1,109. The Nasdaq is down 8 points to 2,298.
We have a lot to cover in the Members Area this afternoon as we have updated all of our comments on the current trades. Notice how the indexes are testing their 200-day averages? If we close below S&P 1,108 and Nasdaq 2,300 then the bears are still letting it be known they are hanging around.
Tags: BP stock, BP testimony, Gulf Oil spill, momentum options trading, option picks, options alerts, stock options trading
Posted in Oil, Trading Psychology | Comments Off
Sunday, June 13th, 2010
7:30pm (EST)
The bulls made the most of their opportunities and scored their first weekly win in a month as the market moved back towards key resistance levels. Ben Bernanke and China played an important role in helping the bulls get out of their funk, but will it be enough?
Friday’s action was choppy, but there was a little buying in the final hour as the Dow finished with a 40 point gain to settle at 10,211. For the week, the index added 279 points, or 2.8%.
The S&P 500 advanced 5 points to close at 1,091 but fell short of the 1,100 level which will be the battle ground going forward. For the week, the index gained 27 points, or 2.5%.
The Nasdaq jumped 25 points to settle at 2,243, and for the week the index popped 85 points, or 3.9%.
Although the market rebounded, we contribute much of the rise to a short-covering rally and nothing more. The technical picture still looks lousy, and the volume just wasn’t there to push the market past resistance.
Another index we are watching closely, the Russell 2000, added 9 points on Friday to close at 649. However, the index fell below its 200-day moving average earlier in the week, but rallied back to close above it. The 650 area is key resistance from January and moving forward it will represent a test.
As far as the other indexes, we could see a little follow-through on Monday and Tuesday and our top-end ranges remain Dow 10,200-10,300; S&P 500 1,075-1,100; and Nasdaq 2,200-2,300. We have pretty accurate in calling this “range” and we wouldn’t be surprised if the market stretched these levels at a little.
There might me a little “fluff” to the upside but our downside targets remain Dow 9,800 then 9,500. The S&P should test 1,050 again and a break below this level clears the way for 975. The Nasdaq has support at 2,150 then 2,050 but we still feel this index gets hit the hardest and will be at 1,900 over the next month or so.
This week could bring even more volatility as it is “triple-witching” expiration on Friday. Triple witching happens four times a year and occurs on the third Friday of March, June, September and December. It is an event dubbed as “Freaky Friday” on Wall Street.
This is usually a bullish day except for June triple-witching which has produced more negative results over past last decade.
As far as economic news, we get numbers on housing-starts and building-permits for May on Wednesday, and on Thursday the May reading of the consumer price index is due.
On Tuesday, we are eager to see how The Chicago Board Options Exchange does with its initial public offering (IPO). CBOE Holdings will make its debut when many IPOs have been struggling as a result of the current market volatility. However, demand should be strong for this one.
BP’s (BP, $33.97, up $1.19) CEO will be the latest suit-and-tie big wig to face Capitol Hill. Tony Hayward has been asked to testify on Thursday before the House Energy and Commerce committee which has been scrutinizing the company’s actions in the cleanup of the oil spill.
Yesterday, the Coast Guard gave BP 48 hours to come up with a more aggressive plan to contain the leak, and there will also be pressure for BP to setup a reserve fund to pay for everything. Still up in the air is the dividend which is scheduled for payment by the end of the month.
The current environment still favors the bears so we aren’t too concerned with last week’s rally. There are a few key earnings announcements that could impact the market this week, and we will take a look at those companies reporting in the morning.
Tags: BP, CBOE Holdings, momentum options trading, option picks, options alerts, stock options trading
Posted in Company Commentary, IPOs, Market Analysis, Oil | Comments Off
Thursday, June 10th, 2010
9:00am (EST)
The bulls turned the ball over to Fed Chairman Ben Bernanke to help pull them out of their rut on Tuesday, and on Wednesday he was still firing fastballs. The market moved higher on about every word he spoke as the Dow busted through the 10,000 level and reached a high of 10,065.
As far as the economy, Big Ben said it “appears to be on track to continue to expand through this year and next”. However, the bears kept battling and ended up going yard to win yesterday’s ballgame. The euro gave back its gains as well and ended the day below the $1.20 level.
As a result, the Dow finished with a 40 points decline, or 0.4% to close at 9,899. The S&P 500 fell 6 points, or 0.6%, to finish at 1,055 while the Nasdaq slipped 11 points, or 0.5%, to settle at 2,158.
BP (BP, $29.20, down $5.48) took another hit. The stock didn’t have a chance yesterday as the suit-n-ties from DC sent BP’s CEO a letter asking him to do away with the dividend payment which is due at the end of the month and to stop advertising until the spill is cleaned up.
How crazy were the options pits? The June 30 puts (BP100619P00030000, $0.52, up $0.47) opened at 7 cents on Wednesday and hit a high of 73 cents. Wow. We are talking gains up to 1,000%!
The July 7.50 puts (BP100717P0007500, $0.19, up $0.17) gained 850% after opening at 3 cents. Yes, the 7.50 puts were even active.
The problem with getting too aggressive with BP is there could be a “snap-back” rally and playing with put options can be dangerous as BP tries to spin us good news.
We aren’t sure where BP will finish at today, next week, or next month but things sure are looking like bleak.
Futures are pointing towards a higher open this morning and it will be interesting to see how the day unfolds. In a bear market, you normally see sharp rallies at the open only to see them fade by the close.
Tags: Ben Bernanke, BP, momentum options trading, option picks, options alerts, stock options trading
Posted in Company Commentary, Oil, Trading Tips | Comments Off
Wednesday, June 9th, 2010
9:00am (EST)
The bulls turned to their closer in the final hour of trading to get back in the win column on Tuesday. Fed Chairman Ben Bernanke gave the the market some good news to go on, but the rally didn’t materialize until late as other headwinds kept things in check. However, after two days of intense bear action the bulls were able to reverse the tables as they rallied instead of fading into the close.
“Big Ben” said he continues to see the U.S. economy improving, although it won’t be as strong as many are hoping for. He also went on to say that a slow economic recovery will keep unemployment rates high and that the Fed wouldn’t wait for them to come down before raising interest rates.
The euro also rebounded yesterday, somewhat, after the overseas markets closed. The currency rose to $1.197 after hitting a four-year low on Monday.
As a result, the Dow enjoyed a triple-digit gain or 123 points, or 1.3%, to finish at 9,939. Microsoft (MSFT, $25.11, down $0.18) and Intel (INTC, $20.18, down $0.13) were 2 of only 4 blue chips that failed to finish in the green.
The S&P 500 was under the 1,050 level for much of the day, but ended with an 11 point pop, or 1.1%, and closed at 1,062. The index found support at the 1,040 level and held but we still see triple-digits on the horizon.
The Nasdaq, however, failed to keep up with its teammates as it fell 3 points, or 0.2%, to settle at 2,170. Tech got hurt after some negative comments that a weaker euro would drag down U.S. corporate profits but the index pared its losses significantly after trading to a low of 2,139.
(Note to self, the Russell 2000 fell 1 point, or 0.1%, to end at 617).
Yesterday’s run was impressive but it wasn’t a “snap-back” rally by any means. We have slowly been building bearish positions over the past couple of weeks and they are off to a great start. If there is a continued rally (which we doubt) then we have stop targets in place to protect profits and limit losses.
The talking heads will tell you that the recent selloff has come too hard, too fast, but they haven’t seen anything yet. We are still looking to add another trade or two, and today we are adding one at the open if we can get a good entry price. We also take a look at BP (BP, $34.68, down $2.08) as your editor-in chief recalls the days of Enron.
Tags: BP, Enron, momentum options trading, option picks, options alerts, stock options trading
Posted in Company Commentary, Oil, Trading Psychology, Trading Tips | Comments Off
Tuesday, June 8th, 2010
1:10pm (EST)
The market is mixed as the Dow is higher by 44 points to 9,860 while the S&P 500 is up 2 to 1,052. The Nasdaq is lower by 14 points to 2,159.
The Russell 2000 is down 5 points to 612, and has set a new low for the year. We mentioned in our Weekly Wrap that we were watching this index carefully as confirmation money is being taken out of the market.
Offshore drilling contractors got downgraded today by one brokerage firm. Noble (NE, $26.62, down $1.11) and Baker Hughes (BHI, $37.32, down $0.75) were lowered to ”Market Perform” from “Outperform” and Diamond Offshore (DO, $55.89, down $3.32) to “Underperform” from “Market Perform”.
BP (BP, $35.00, down $1.76) and Transocean (RIG, $44.95, down $4.22) are at fresh 52-week lows. BP is getting whacked on bankruptcy rumors while Transocean is getting drilled after reports of another oil leak/ rig failure.
Gold is higher by $7 to $1,249/ ounce.
We are short on commentary today because we have been looking at charts and updating our current trades as they continue to perform well. Subscribers, check the Members Area for the updates. We will be back in the morning with a full update, but if you are not yet a current subscriber then we urge you to give us a try.
We think there are some great trades in our portfolio that could easily see triple-digit returns over the next six weeks.
Tags: BP (BP), momentum options trading, option picks, options alerts, stock options trading, Transocean (RIG)
Posted in Oil, Trading Psychology, Watch Lists | Comments Off
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MomentumOptionsTrading.com Weekly Wrap for 6/13/10
Sunday, June 13th, 2010
7:30pm (EST)
The bulls made the most of their opportunities and scored their first weekly win in a month as the market moved back towards key resistance levels. Ben Bernanke and China played an important role in helping the bulls get out of their funk, but will it be enough?
Friday’s action was choppy, but there was a little buying in the final hour as the Dow finished with a 40 point gain to settle at 10,211. For the week, the index added 279 points, or 2.8%.
The S&P 500 advanced 5 points to close at 1,091 but fell short of the 1,100 level which will be the battle ground going forward. For the week, the index gained 27 points, or 2.5%.
The Nasdaq jumped 25 points to settle at 2,243, and for the week the index popped 85 points, or 3.9%.
Although the market rebounded, we contribute much of the rise to a short-covering rally and nothing more. The technical picture still looks lousy, and the volume just wasn’t there to push the market past resistance.
Another index we are watching closely, the Russell 2000, added 9 points on Friday to close at 649. However, the index fell below its 200-day moving average earlier in the week, but rallied back to close above it. The 650 area is key resistance from January and moving forward it will represent a test.
As far as the other indexes, we could see a little follow-through on Monday and Tuesday and our top-end ranges remain Dow 10,200-10,300; S&P 500 1,075-1,100; and Nasdaq 2,200-2,300. We have pretty accurate in calling this “range” and we wouldn’t be surprised if the market stretched these levels at a little.
There might me a little “fluff” to the upside but our downside targets remain Dow 9,800 then 9,500. The S&P should test 1,050 again and a break below this level clears the way for 975. The Nasdaq has support at 2,150 then 2,050 but we still feel this index gets hit the hardest and will be at 1,900 over the next month or so.
This week could bring even more volatility as it is “triple-witching” expiration on Friday. Triple witching happens four times a year and occurs on the third Friday of March, June, September and December. It is an event dubbed as “Freaky Friday” on Wall Street.
This is usually a bullish day except for June triple-witching which has produced more negative results over past last decade.
As far as economic news, we get numbers on housing-starts and building-permits for May on Wednesday, and on Thursday the May reading of the consumer price index is due.
On Tuesday, we are eager to see how The Chicago Board Options Exchange does with its initial public offering (IPO). CBOE Holdings will make its debut when many IPOs have been struggling as a result of the current market volatility. However, demand should be strong for this one.
BP’s (BP, $33.97, up $1.19) CEO will be the latest suit-and-tie big wig to face Capitol Hill. Tony Hayward has been asked to testify on Thursday before the House Energy and Commerce committee which has been scrutinizing the company’s actions in the cleanup of the oil spill.
Yesterday, the Coast Guard gave BP 48 hours to come up with a more aggressive plan to contain the leak, and there will also be pressure for BP to setup a reserve fund to pay for everything. Still up in the air is the dividend which is scheduled for payment by the end of the month.
The current environment still favors the bears so we aren’t too concerned with last week’s rally. There are a few key earnings announcements that could impact the market this week, and we will take a look at those companies reporting in the morning.
Tags: BP, CBOE Holdings, momentum options trading, option picks, options alerts, stock options trading
Posted in Company Commentary, IPOs, Market Analysis, Oil | Comments Off