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AMR, American Airlines Headed for Bankruptcy, Again

Tuesday, November 29th, 2011

12:20pm (EST)

Most of you aren’t shocked by today’s headlines that AMR (AMR, $0.35, down $1.27), the parent company of American Airlines, has filed for Chapter 11 bankruptcy after blaming higher fuel costs and its failure to win a labor deal with its pilots.  The company said it currently has assets of $25 billion while its liabilities are approaching $30 billion.  With only $4 billion in cash, AMR felt it would be best to reorganize now and the Chapter 11 filing won’t affect flights during the bankruptcy process.

Airlines stocks have never been a great long-term investment, unless you short them, but there are times when you can trade them.  The industry has never been able to flip a profit since being deregulated in the 1970’s so trade this sector with caution.

Although 3Q earnings season is winding down, there are still a few notable companies that will be reporting over the next few weeks.  Tiffany & Company (TIF, $67.45, down $6.17) beat Wall Street’s estimates after reporting a profit of $90 million, or $0.70 a share, versus $55 million, or $0.43 a share, in the year earlier period.  Revenue came in at $822 million.  Analysts were expecting $0.61 a share on sales of $804 million.

Going forward, the company said it expects earnings of $1.48-$1.58 for the current quarter but the suit-and-ties were looking for $1.63, on average.  Tiffany pointed the finger at Europe for the lowered expectations, which was no surprise, but either way, shares are down 8%.

As far as the market, the bulls are making continued progress after getting a better-than-expected Consumer Confidence number.  The November reading of 56 was a big jump from October’s print of 40.9 and much higher than the forecast of 44.  Elsewhere, the S&P Case Shiller Index fell 0.6% and missed expectations for no change.

The European markets are now closed for the day as the region’s top brass will meet behind closed doors tonight.  They will be trying to come up with a better solution for their current debt crisis so the news over the next few days will be market moving. 

The bulls have done a great job in pushing the indexes forward as they have broken through our near-term resistance targets.

The Dow is up 95 points to 11,617 while the S&P 500 is higher by 9 points to 1,202.  The Nasdaq however, is struggling a bit and was last seen at 2,528, up a point. 

We have 2 NEW TRADES we are releasing today that we are expecting to return 100%+ on each so we have to roll.  Subscribers, check the Members Area for the updates and the new option recommendations.

It’s All About Retail

Monday, November 29th, 2010

9:00am (EST)

Futures are pointing towards a slightly lower start this morning despite some encouraging data related to the holiday shopping season.  Early numbers are positive as consumers have spent over $11.6 billion on the holiday season-to-date, up 13% versus this time last year. 

Black Friday was especially good to the internet as online sales came in at $650 million, which represented a 9% increase versus Black Friday 2009.  Thanksgiving Day, which is traditionally a lighter day for online sales, achieved nearly a 30% increase to over $400 million.

PayPal, eBay’s (EBAY, $31.15, down $0.06) popular online payment method, reported strong Black Friday shopping results, as sales surged nearly 27% in total payment volume on Black Friday 2010, compared to the previous year.

eBay made a gem of a purchase when it acquired PayPal back in 2002 for $1.5 billion.  PayPal accounted for almost 40% of eBay’s overall revenue in the most recent quarter, versus just over 20%, five years ago.  EBay’s payments unit, which consists mostly of PayPal, did $840 million in payments in its latest quarter and might hit $1 billion this quarter.

The real growth for PayPal, err, we mean eBay, is the mobile ad business which saw over a 300% increase in mobile shopping on Black Friday. eBay may not want to admit it, but PayPal could end up becoming bigger than eBay itself down the road.

Shares of eBay hit a fresh intra-day high of $31.48 on Friday.

Retailers will remain in focus today as more sales results from Black Friday start to trickle in, and online retailers gear up for today’s Cyber Monday sales.

As we head to press, Dow futures are down 5 points to 11,025 while the S&P futures are off by a point to 1,182.  The Nasdaq 100 futures are lower by 3 points to 2,143.  We have a lot to cover in our Members Area so let’s get to it.

Education Stocks Feeling the Heat

Tuesday, August 17th, 2010

9:00am (EST)

The market ended mixed on Monday as the bulls and bears battled to a draw on what was the second-lightest volume day of the year.  The bears held an early advantage as the major indexes dropped nearly 1% after the open but the bulls managed a steady comeback the rest of the day.

As we enter the dog days of summer, we expected volume to dry up, but yesterday’s action wasn’t a good sign if you are bullish.  Trading has been light in recent weeks but the bulls will need volume to pick up if they expect to have a sustained rally.  

The Dow traded to a low of 10,209 before finishing the day down 1 point at 10,302.  We have been mentioning that 10,200 would act as the first layer of support with a possible test of 10,000 should a break below this level occurs.  Overhead resistance is at 10,400.

The S&P 500 was up fractionally and settled right where it started the day at which was 1,079.  The index traded down to our 1,070 target, making a low of 1,069, which could clear the way for a test of 1,050 again.  Short-term resistance remains at 1,100 for the bulls.

The Nasdaq continues to be the most volatile of the major indexes and has been making the bigger moves of late.  The index added 8 points to close at 2,181 but touched a low of 2,155.  Our near-term targets are 2,150 and then a possible test to 2,050.  Tech traded to a high of 2,193 but continues to have trouble with the 2,200 region. 

One sector on the move yesterday were the Education stocks which got slammed over regulatory uncertainty.  There are concerns the government will impose tighter controls on student loans and Wall Street has been downgrading these stocks in a hurry. 

Corinthian Colleges (COCO, $5.22, down $1.44) tanked over 20% and traded 40 million shares, or 10x normal daily volume.  The August 7.50 put options (COCO100821P0007500, $2.45, up $.135) zoomed 120% as the stock made a fresh 52-week low.  

coco081710

Strayer Education (STRA, $163.26, down $36.75) got slammed for an 18% loss but the August 155 puts (STRA100821P00155000, $1.75, up $1.20) soared nearly 220%.

stra081710

Capella Education (CPLA, $60.94, down $9.26) fell 13% but touched a low of $56.44 before rebounding.  Now you know why we trade options…

cpla081710

We have been mentioning the Education stocks, specifically, Apollo Group (APOL, $40.98, up $2.04) which bucked the trend yesterday, and their shady business practices for nearly two years now and this bubble is finally popping. 

We tried playing options on Apollo back in May and lost 16% after shutting the trade down due to volatility.  At the time, shares were at $55 and we knew the stock was setting up to test 52-week lows.  We were just a little early at the time but the chart said it all.

The good news is that we took another look at Apollo over the weekend and the selling pressure might not be over.  If shares break below $38, we could quickly see a run to the lower $30’s.  Currently, the 52-week low is $38.39 and some support should come in at $35, but over the next month or two this stock could lose another 25%.

Futures are pointing towards a slightly higher open despite some less-than-stellar economic news which we will go over this afternoon.  Dow futures are higher by 63 points to 10,336 while the S&P 500 futures are up 10 points to 1,087.  The Nasdaq 100 futures are showing a 12 point pop and are at 1,832.   

Talk About A 3D Revolution…

Tuesday, April 27th, 2010

9:05am (EST)   

The market struggled to hold its early gains on Monday and finished mixed after the bulls lost their enthusiasm.

The bulls were able to squeeze a fraction of a point for the Dow as it finished at 11,205 after trading as high as 11,258.  If it weren’t for Caterpillar’s (CAT, $71.65, up $2.87) powerful results, the Dow would have lost over 22 points which is how much the shares accounted for in the index yesterday. 

The S&P 500 fell 5 points to finish at 1,212 but above 1,210 which had been short-term resistance.  The index kissed a new 52-week high of 1,219 earlier on Monday and is still above its 10-day moving average.

The Nasdaq also finished lower as it slipped 7 points to settle at 2,522.  The Tech-heavy index also hit a fresh intra-day high of 2,535 before it gave up its gains.

There were pockets of strength yesterday and one sector that continues to outperform are the Entertainment/ Movie stocks.

Imax (IMAX, $21.13, up $1.02) continues to amaze us and set another 52-week high.  We have been on this company like grass on dirt when shares were at $3 a few years ago and when they broke $10 back in October we mentioned shares could run to $20+.  Bingo.

imax042710

Netflix (NFLX, $108.17, up $8.44) has also blown past our price target of $100 which we set back in November when the stock was in the$50’s and nobody else on Wall Street would touch it. 

nflx042710

And what about Walt Disney (DIS, $37.04, up $0.25) which we’ve flirted with a few times by playing call options?  That stock also set a new annual high yesterday.

dis042710

This sector remains white-hot and we think there will be some M&A activity over the next few months that could take this sector even higher.

Turning our focus to the Financial stocks, Goldman Sachs (GS, $152.03, down $5.37) will take center stage today after being blamed for dumping 100’s of billions of dollars of toxic assets into everyone’s lap.     

Testimony begins today that will bring Goldman’s CEO, Lloyd Blankfein, and other key executives before Congress.  Somewhere Barney Frank is licking his chops.  This is going to be great drama and we will probably tune-in to catch some of the action.

As we head to press, futures are pointing towards a slightly lower open.  The Dow futures are off by 11 to 11,140 while the S&P 500 futures are down by 6 points to 1,202.  Nasdaq 100 futures are off by 5 to 2,046.  Subscribers, check the Members Area for the updates.

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Trader Comments:

    REGINA L.
    I just want you to know that I love the way you write and explain everything. I am new to this, and have lost 50% of my account until I met you guys. Iit is slowly coming back. I will be calling to set up a year
    of membership rather than the one quarter. Thanks again, and LOVE YOU ALL.

    STEVE T.
    Rick, I appreciate the advice. I think I will just sit back and utilize your selections only for awhile. This will obviously save me a great deal of money in commissions. I have gone thru your entire site including the video on money management. This has brought me to the stark realization that I have been trading too much for too little. I definitely have not been "swinging for the fences", but I also think I have been getting impatient with trades and getting out too fast. This has no doubt caused me too trade too much. I like, and definitely agree on, the advice on money management. Thanks for the help.

    SCOTT H.
    Thank you!!! I held on to the NFLX position since Nov. 13 at a cost of $1.89. Sold ½ on April 14th for a 540% return and the other ½ upon earnings for 702% return. Total profit of $11,615 a 621% return. Keep the recommendations coming and thanks to you and your team for the service you provide.

    PETER G.
    Rick & Team, GREAT Call on NKE for my two trading accounts:
    1) Entry at .65, out at 1.45, 1.55 Profit = $415
    2) Entry at .60, out at 1.75, 1.50 Profit = $485

    LAWRENCE O.
    Hey Rick! Here is an update on what your picks have done in my accounts.

    1) Great call on the JoyG March 55. I bought when you said, then bought again on one of the dips. Booked 80+% profit. Made enough to pay for your service for years to come.

    2) Also booked profits on your Berk Feb 74 (80%) and threw a major chunk of change at the March 75’s (190+%). I would have never known that Buffet's stock had split if it weren’t for your service. Bought the shares also for the long haul. Won’t look at them for another 20 years. Great job on getting us in before the indexes did.

    3) Took profit on your Imax March 12.5. 20 cent trailing stop at 1.90 yesterday. Not sure what the profit on that was, but profit is profit.

    I see that you took a loss on some of these. It’s all good. I look to trade your “ideas” not your exact calls. I THANK YOU! For your ideas and commentary. Keep up the good work. And keep those ideas coming.

    C.J.
    Loving this subscription so far! I got into the BRK feb 76 calls the day you talked about right before the split...now up over 300% (0.70 to 2.475)! Keep the good picks coming and let's see some OSIS and EMC upside soon! Just wanted to share my positive enthusiasm on your newsletter...it gives us individual investors great ideas on not only the options market, but also the broader equity market! Case in point is BRK...I can't always read the breaking business news but its easy to read your twice daily updates on my smartphone...helped me get some BRK shares immediately after the split which I will hold for the long haul! Thanks again!

    SHAUN
    Aloha Rick - Thank you so much for the great CL pick. I am not sure if there was buy-out/merger news or what but at 3PM today Colgate-Palmolive absolutely EXPLODED to the upside, and my calls turned into green candy when they went from 1.40 to 3.8 in a matter of seconds! I even sold a few for over 4.0! Much thanks and keep the solid picks up my friend, honestly. Only a fool would scoff at 267% gains... Peace!

    MICHAEL K.
    I like the fact that you ask for comments from subscribers. Good customer service. By the way, am enjoying the service so far. Some good
    profitable calls. Keep up the good work.

    PARAG P.
    Woo hoo! Out for 50% on WMT this am. Making up for my depression for getting out of pcln for a 30% gain monday :( you the man! any word on the manual? My friend Mike ( who I sent to your service) told me he emailed you about your integrity in reporting fills. I echo that sentiment big time.. keep it up! Cheers!

    JAY P.
    Hi Rick, as a new member all I can say is, 'show off' LOL, with PCLN.

    MIKE
    Rick, I am a new subscriber to your service, and I want to say I am impressed. I am impressed by your results, but more than that I am impressed by your reporting of your fills. You could have easily said you got that Wal-Mart call today for 80 cents, instead you reported 98 cents! Good job and keep it up, I watched the reporting of the fills first, and then I subscribed. Thank You.

    TRISH D.
    Hi, good morning. I jumped the gun a little on this one (PCLN). But still made $1,675.00 profit!! Very happy!! Keep up the good work!! Thanks.

    MIN L.
    Hi there, I have joined recently, and I am very happy to tell you that I am up over $10,000 on your picks in a month. I started on 10/7 with the Intel pick. I'll be your member for life. Please don't quit on us. Also, I am learning a lot about options. I didn’t get in your recent APOL and that gold trade and only had one loss on CHK. I appreciate all the DD you do. I enjoy your market commentaries. Best advice site period, and I have tried a few here and there. Again, you guys rock!

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    Thanks be to Momentum Options Trading for providing me with some fantastic wins. I just started with this service and am up nearly 50% in less than a month. There have been losses, but if I manage them properly, I will continue the best efforts given on the blog (in which there are no complaints). What a great cause for humanity. I feel more confident about my trades and continue to play the wins. Best of all, I am now keeping my regular paychecks in the bank! Thank you!

    GREG F.
    Rick - I wanted to say thanks for getting me started on the right foot with your service. I have made six trades since starting on October 22, 2009. Five are winners and One loser netting me $6,245. Thanks again and keep the trade recommendations coming.

    NOEL
    I got into the Nike 60 Call at 1.85, sold at 5.00, also bought a 55 put at 1.05, but got stopped out at .35. What a ride! $2830.00 in the black even with the put. It's right at 100% return. I hope earnings season coming up is going to look like this trade.

    TODD F.
    Nice call on Nike. I think I'll go buy a pair with my profits! : ) I did the straddle for safety but still made 62% on the trade. Not bad for less than 24 hours. If Goldman is right, then the Nov 70s or 75's could be a steal today.

    PAUL H.
    What a sweet way to get introduced to Momentum. My first trade based on your picks and it a 2X. Thank you!

    NOEL
    “Limit order was set at 1.60 on RIMM so it sold. I may have left some money on the table but you can't go broke making a profit. That was a fun trade. Thank you. Good call. I’ve been watching and trading Rick's advice since March. It’s usually a fun ride, but I give him heck when it's wrong to. :) ”

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    JOHN
    “I made $420.00 on ANF in 2 days. Thanks for the trade and updates on getting out of the trade.”

    CHARLES M.
    “I did follow a lot of your trades with 1-2 contracts per trade and YTD I’m up 108%. I try not to follow blindly by not entering all of your trades and sometimes entering the ones you don’t. I entered AIG a few weeks ago against recommendation – that one hurt.”

    BRYAN C.
    “I have been following you for several months and am interested in the new service. I hate to see the free service go away but as they say, “all good things must come to an end”. My ability to join will be greatly influenced by the monthly fee so I’m very curious to see the new prices. Thanks for making April a great month for me and my family.”

    JOHN H.
    “I have really enjoyed the past month since finding your blog. You have made some great calls. I would appreciate info. on the new options mentoring program. Thanks.”

    JEFFREY
    “Hi Rick, I have been following your blog for several months now and I would like to be including on the list for your new service and to receive more information about it. And yes I was a Dendreon winner with your tips. Turned $280 into $7700, and literally saved my butt.”

    ED
    “I made over 6k on your Dendreon trade, and I’m very interested in learning how you pick and trade options. Sign me up.”

    GREG
    “Rick – Wow what a day! I got in at the Dendreon calls at $2.25. Thanks to for your advice. I appreciate that. This company has a lock on this type of therapy and no one else in the world is close. Kind of reminds me of the type of companies that Peter Lynch and Warren Buffet suggest that investments be made in. Companies that can build a moat around their business model, that allows them to charge a premium for their product or service. In other words - a monopoly.”

    KEN
    “Hi Rick, Thank you so much for the Dendreon trade, I made almost $10,000 with that trade with a little over $2,000 investment. You have shown me the power of options trading. Again, thank you so much for all your inputs.”

    GARETT
    “Hi Rick, thanks for the encouragement to play the dendreon calls! did freaking great! Got in the first lot at $1.44 on 3-24-09, sold at $2.45, 70% not bad. Bought it back at $2.30 on 4-7-09 closed out on 4-14-09 for 454% gain! Wow! I love it when that happens. So, thanks the encouragement to get back in when others were saying sell, sell, sell. Keep up the good work.”

    TERENCE
    “Rick – Thanks for Dendreon – it has made all the headlines today! I missed on RIMM earlier, but I’ve been holding onto DNDN calls since 3rd week March. Of course today it all paid off today, as DNDN rocketed up.”

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