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Friday, March 19th, 2010
1:05pm (EST)
The looming U.S. Congressional vote to overhaul the U.S. healthcare system this weekend is putting a huge drag on the market as Wall Street prepares for the outcome. The market has fallen to session lows and it’s hard to say how this impacts Wall Street come Monday.
The concern from our camp is how the U.S. can pay for such a massive bill and the effects it will have on corporate America. Wall Street is not happy about the bill and you can see the nervousness as traders are locking in profits ahead of the weekend.
From a technical view, here is where we are.
The Dow is currently down 60 points to 10,719 after reaching a high of 10,819. As you know, we have been pounding the table on Dow 10,800 and as soon as we hit it the index today we faded. We are hoping for a close above this level and a push towards 11,000 but that looks unlikely today.
The S&P 500 is off by 7 points and is trading at 1,159 after reaching 1,169. Our targets are 1,175 and then 1,200 for the index but we also faded at that first level of resistance. The key level to watch to the downside is 1,150. A break below this level could lead to more selling pressure.
The Nasdaq is at 2,370, down 21 points, and has traded to a high of 2,396. We have been calling for 2,400 and this level was hit on Wednesday. The fact that we keep running up to this level and falling back is a little troublesome but we haven’t given up hope on a push towards 2,500.
Despite the concern over the health plan bill, the market can still go higher. All of the talking heads are calling for a huge pullback but they have missed the rally over the last 3 weeks. However, go by “feel” and all signs were pointing to a retest of the January highs.
Although the market faces serious headwinds and next week is a toss-up as far as direction, there are a number of positive catalysts that can carry us higher. First quarter earnings will start to roll in at the beginning of April and we think the numbers are going to be fantastic. We also have a shot at a better-than-expected jobs report in April and these two events could prove the economy is back on track and gaining strength.
As far as specific stocks today, HealthCare shares are having a good day. The group is up almost over 2% and is being led by Aetna (AET, $34.40, up $1.16), Cigna (CI, $37.56, up $1.72) and Wellpoint (WLP, $65.54, up $1.72).
The HealthCare sector has lagged the rest of the market for the past two months and a positive vote could remove some of the uncertain overhang from the stock of managed care companies. We expect to see a “buy the news” situation versus the “sell the news” we often talk about and we are seeing a little of that today.
Elsewhere, Palm (PALM, $4.42, down $1.23) is down over 20% and we wanted to follow-up on a couple of options we profiled this morning. The March 5 puts (UPY100320P00005000, $0.48, up $0.31) closed at 17 cents yesterday and are up 180% today. The April 5 puts (UPY100417P00005000, $0.90, up $0.45) have doubled.
We didn’t pull the trigger on these options but we have done well with some of our other trades this week. We were able to close two trades for winners this week so we can’t complain. Our subscribers booked nearly a 200% gain with Nike (NKE, $73.38, down $1.28) as they were stopped out of the other half of the trade this morning and over a 40% gain in Qualcomm (QCOM, $39.87, down $0.56) yesterday. We aren’t too worried about what the outcome of the health bill will be because we can trade any kind of market.
If it looks like the market heads lower or is going to tank then we will start looking at put options. And this is the way you should think. Look, we will play the market higher if that is the case but most investors are scared to play in the market when it is going down. Don’t be.
You can make just as much money in a down market as you can in an up market.
All of our 2010 CLOSED trades will be updated after the bell today so look for an update over the weekend for those of you who haven’t joined us. For our current subscribers, let’s get to the Members Area for the updates…
We will be back with our Weekly Wrap Sunday Night and it is one you won’t want to miss. Hopefully, we will have the healthcare news by the time we go to press and what you can expect come Monday morning.
Tags: health care vote, Nike call options, NKE options, Obamacare vote, option picks, option signals, options alerts, QCOM, Qualcomm call options, stock options trading
Posted in Company Commentary, Market Analysis, Sectors | Comments Off
Friday, February 12th, 2010
1:05pm (EST)
The market is taking one on the chin today as most of the major indexes are experiencing losses but have come of the lows. The bulls have traded blows, literally, every day this week and after the win yesterday, it’s the bears turn.
There are a lot of elements causing today’s sell-off but more news that China said it would require banks to increase reserve levels is the biggie. It was the second time in a month that this sentiment was echoed which would limit the amount their banks can lend.
Currently, the Dow is down 47 points to 10,097 while the S&P 500 is off by 4 points to 1,074. Meanwhile, the Nasdaq is higher by a point to 2,178 and now seems to be the “strongest” of the big three.
Trading continues to be choppy but our feeling is that individual investors do not want to commit new money to the market and traders are squaring up positions before the long holiday weekend. The market will be closed on Monday for President’s Day.
Next week is options expiration week as the February chains expire NEXT Friday.
Folks, there could be an explosive move in store with a possible Greece resolution, options expiration week, and more pending news out of Washington expected. China will be closed next week.
We should also get a clear signal on which way the market is headed. A lot of money is being bet on the short-side but we aren’t taking sides just yet. There are some interesting gyrations developing and there is a chance the market bounces off these current lows to much higher levels.
Remember, when the herd thinks alike, the herd is likely to be wrong. Right now, the sentiment on Wall Street is calling for a market correction, a pullback, or we are headed below previous lows, meaning Dow 7,500. We don’t see that in the cards but we always look at both sides of the ball and try to play the trend.
We mentioned this morning that our trading manual is ready and folks, we are really super excited to bring you this product. Our hope is to show you how to set-up a plan to follow the market, learn how it works and to find your own option trades.
You will be able to look at a stock and its chart and figure out EXACTLY what the stock needs to do for the trade to be profitable. You will learn to figure out the best entry and exit prices and what your risks and rewards are.
Plus, with our expanded Watch Lists that includes up to date charts and detailed descriptions of what each company does, you will able to follow hundreds of stocks. However, we teach you how to focus on where the money is flowing and what sectors are hot and which ones are turning cold.
We wanted to roll this out to start the New Year but we wanted to wait because of the current changes taking place in the options market right now.
We have been using new options quotes as many of you have seen in our Members Area and last weekend we did a special write-up on how to decipher the new symbols. If you haven’t read it, click here. It is a great read and it actually makes it easier to remember option symbols.
We are planning for hard copies to be available in March and there will be a special rate for the first month. We are making this an incredible deal and it is our way of thanking all of you who have followed us for the last 2 years. One bonus is that anyone who purchases our course will get an extra one-year membership added to their current subscription or if you are a new subscriber it will be included.
We are excited about the opportunity to teach you some of the neat features that will show you option trades that could provide you returns of up to 100%, 200%, 800% and even 2,500%. Our track records from 2008 and 2009 are littered with these types of returns and you can view them at anytime.
Our 2010 track record will be available in a few weeks as we still have open trades for February so look out for it as well. Of course, if you are already a subscriber then you have access to it daily. There you will find all of our CURRENT trades AND all of the closed ones for the year. If you have any questions on the manual, please email us over the weekend and we will get them answered.
We will be back MONDAY night with the Weekly Wrap so everybody have a safe and happy 3-day weekend.
Tags: option picks, option signals, options alerts, stock options trading
Posted in Company Commentary, Hot Stocks, Market Analysis, Market Commentary, Option Trades, Sectors, strangle option trades, Strategies, Trading Psychology, Trading Tips, Watch Lists | Comments Off
Tuesday, February 9th, 2010
1:10pm (EST)
Forget the bulls and bears it’s all about the PIGS today.
The market got a huge lift this morning after Wall Street became hopeful that Robin Hood would be helping the Greek debt situation. There is a report that the “euro zone” countries have decided in principle to help debt-stricken Greece and there is news that Portugal hired Barclays and Goldman Sachs (GS, $152.85, up $1.76) to help it sell bonds.
Greece’s finance minister said he cannot call for outside aid, as doing so would send a negative signal to bond buyers, and this will not be a bailout. Still, this has been a dark cloud over the market and it may have been the bulls wild card.
Shares of National Bank of Greece (NBG, $4.10, up $0.68) have rallied 20% on the news but it would be a hard stock to trust.
At a result, the Dow is up 211 points, or 2.2%, to 10,120 while the S&P 500 is higher by 21, or 2.0%, and is at 1,077. The Nasdaq is lagging but is still enjoying a 37 point pop and stands at 2,162.
In economic news, the Commerce Department reported that wholesale inventories were lower by 0.8% in December compared to an expectation that inventories would rise by 0.5% during the month.
Caterpillar (CAT, $53.93, up $3.15) is one of the Dow components that is fueling this huge rally. The stock is up over 6% after an analyst upgrade. Coca-Cola (KO, $54.86, up $2.21) was up 4% after reporting better than expected earnings as revenues benefited from emerging market growth.
Tags: CAT, Goldman Sachs, KO, National Bank of Greece, NBG, option picks, option signals, options alerts, stock options trading
Posted in Company Commentary, Earnings, Hot Stocks, Option Trades, Sectors, Stock Earnings | Comments Off
Saturday, February 6th, 2010
11:00pm (EST) Special Update
We have been talking about the new option symbol changes that will take place starting next Friday, February 12th, and we wanted to get everyone prepared for the transition. As you know, current option symbols range from 3-to-5 characters but all options will become 8 to 21 symbols long once the conversion takes place.
The goal is to make options easier to decipher but all you really need to know to place a trade is the underlying stock, the expiration month you want, the strike price and whether it’s a call or a put. They will look more complex but most brokerage accounts have already upgraded their trading platforms so that you really don’t even need to remember the option symbols anyway.
We have already started incorporating the new style of options symbols for our latest trades and ideas and we will continue displaying the old or current symbols up until the change. Some financial sites have already made the switch but even if you see different symbols you can still place a trade as long as you know the option you want.
The one problem with current option quotes is that some stocks use their stock symbols as the first part of the option while others don’t. For instance, the option quotes for International Business Machines (IBM, $123.52, up $0.52) start with “IBM” while the options for Microsoft (MSFT, $28.02, up $0.18) start with “MSQ”.
We will look at these two stocks and their current options and show you the new change.
The IBM February 125 Calls (IBMBE, $1.16, up $0.04) currently look like this. The new option symbol becomes (IBM100220C00125000). NOTE: The “option root symbol” can be up to 6 characters long.
The Microsoft February 27 Puts (MSQNB, $0.24, down $0.10) will become (MSQ100220P00027000). NOTE: Until February 12th the option root will be the same as the previous. After the 12th, they should read (MSFT100220P00027000).
The stock’s underlying ticker symbol will always be used in the new symbol. MSQ will soon become MSFT. The days of “decoding” option root symbols are coming to a close. This wasn’t a big deal anyway but it does make things easier.
The second element, the expiration date, is always six numbers. In this case, “100220″ for both IBM and Microsoft represents February 20, 2010, the expiration date for February 2010 options. The first two numbers, “10″, represents 2010; the “02” for February; and “20” for the day. A 2011 option reads “11”, a December option would be “12”
The expiration date is always on the Saturday that follows the third Friday of the month, unless that Friday is a market holiday, in which case the expiration is on the Friday. This is a little confusing though as the last day to trade options for February is Friday, the 19th.
The third part is if the option is a call or put which is represented with a ”C” or “P”.
The last set of numbers represents the strike price, which consists of eight numbers. The first 5 denote the strike dollar price, and the remaining 3 represent the decimal (if any).
Thus, “00027000″ represents the Microsoft February 27 put strike. If it were a 27.50 strike, it would read “00027500.”
The new terminology will take some getting used to but again, as long as you know the stock, the month you are playing, the strike price and if it’s a call or put option you will be fine. If you have any questions, email us.
Tags: new option symbols, option picks, option signals, option symbol change, option symbol changes, options alerts, options expiration, stock option symbol changes, stock options trading
Posted in Market Commentary, Money Management, Option Trades, Sectors, Strategies | Comments Off
Friday, February 5th, 2010
1:20pm (EST)
The market is trending lower once again despite the ”surprise” unemployment rate numbers from the Labor Department this morning. The Dow is well below the 10,000 level and appears headed for its fourth-straight weekly loss.
The bulls got excited when they heard the unemployment rate unexpectedly fell in January to 9.7% from 10%, as Wall Street had pegged a number of 10.1%. That was the good news. The bad news was employers cut 20,000 jobs, more than the 5,000 expected.
As a result, the Dow is down 74 points, or -0.7%, and is currently at 9,928. The S&P 500 is off by 8 to 1,055 while the Nasdaq is getting clipped for a 6 points and stands at 2,120.
Just when we said we needed to see more M&A activity…Air Products and Chemicals (APD, $68.14, down $5.55) has made a $5 billion bid for Airgas (ARG, $60.27, up $16.74) and is willing to go “hostile”, if need be. Shares of Airgas are up 38% but the February 50 calls (ARGBJ, $10.20, up $10.15) (ARG100220C00050000) are up 20,000%. Ah yeah…we wish we would have gotten you in that trade yesterday.
The stock is trading above the offered price of $60 a share which could signal that a higher bid may be needed to get the deal done. A merger would create one of the biggest industrial gas companies in the world and this is the third time Air Products has made an offer as the other two were shot down.
Air Products already knows it may have to dig deeper in its coffers.
If you will notice, we included two different option symbols to reflect the upcoming changes that are going to be taking place in the option pits. With 20+ inches of snow coming our way, we will have no excuse for not getting this information out to you this weekend.
We are old school and we hate to see the change but it should make option trading easier and you really don’t need to worry about all those confusing numbers. We are going to break it down for you on how they work but don’t sweat it.
As we look forward to earnings next week, Hasbro (HAS, $30.73, down $0.53) could be in-play before the market opens on Monday. Wall Street is looking for the company to report a profit of $0.82 cents a share on revenue of $1.3 billion. As far as the options, it looks like put volume is outpacing the call options but traders could be selling the puts as well.
Our checks indicate that the company had a great quarter and they could surprise Wall Street by a few cents. That might not mean anything given the current market environment as the stock could sell-off despite an earnings beat.
We have updated our current trades before we head out and make sure to look for a complete portfolio update over the weekend as well as the options symbol review in the Members Area. When we post them, we will be sure to send out an email.
Tags: APD, ARG, HAS, Hasbro, option picks, option signals, options alerts, stock options trading
Posted in Company Commentary, Market Analysis, Mergers and Acquisitions, Sectors, Trading Psychology | Comments Off
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Wall Street Braces for HealthCare Vote
Friday, March 19th, 2010
1:05pm (EST)
The looming U.S. Congressional vote to overhaul the U.S. healthcare system this weekend is putting a huge drag on the market as Wall Street prepares for the outcome. The market has fallen to session lows and it’s hard to say how this impacts Wall Street come Monday.
The concern from our camp is how the U.S. can pay for such a massive bill and the effects it will have on corporate America. Wall Street is not happy about the bill and you can see the nervousness as traders are locking in profits ahead of the weekend.
From a technical view, here is where we are.
The Dow is currently down 60 points to 10,719 after reaching a high of 10,819. As you know, we have been pounding the table on Dow 10,800 and as soon as we hit it the index today we faded. We are hoping for a close above this level and a push towards 11,000 but that looks unlikely today.
The S&P 500 is off by 7 points and is trading at 1,159 after reaching 1,169. Our targets are 1,175 and then 1,200 for the index but we also faded at that first level of resistance. The key level to watch to the downside is 1,150. A break below this level could lead to more selling pressure.
The Nasdaq is at 2,370, down 21 points, and has traded to a high of 2,396. We have been calling for 2,400 and this level was hit on Wednesday. The fact that we keep running up to this level and falling back is a little troublesome but we haven’t given up hope on a push towards 2,500.
Despite the concern over the health plan bill, the market can still go higher. All of the talking heads are calling for a huge pullback but they have missed the rally over the last 3 weeks. However, go by “feel” and all signs were pointing to a retest of the January highs.
Although the market faces serious headwinds and next week is a toss-up as far as direction, there are a number of positive catalysts that can carry us higher. First quarter earnings will start to roll in at the beginning of April and we think the numbers are going to be fantastic. We also have a shot at a better-than-expected jobs report in April and these two events could prove the economy is back on track and gaining strength.
As far as specific stocks today, HealthCare shares are having a good day. The group is up almost over 2% and is being led by Aetna (AET, $34.40, up $1.16), Cigna (CI, $37.56, up $1.72) and Wellpoint (WLP, $65.54, up $1.72).
The HealthCare sector has lagged the rest of the market for the past two months and a positive vote could remove some of the uncertain overhang from the stock of managed care companies. We expect to see a “buy the news” situation versus the “sell the news” we often talk about and we are seeing a little of that today.
Elsewhere, Palm (PALM, $4.42, down $1.23) is down over 20% and we wanted to follow-up on a couple of options we profiled this morning. The March 5 puts (UPY100320P00005000, $0.48, up $0.31) closed at 17 cents yesterday and are up 180% today. The April 5 puts (UPY100417P00005000, $0.90, up $0.45) have doubled.
We didn’t pull the trigger on these options but we have done well with some of our other trades this week. We were able to close two trades for winners this week so we can’t complain. Our subscribers booked nearly a 200% gain with Nike (NKE, $73.38, down $1.28) as they were stopped out of the other half of the trade this morning and over a 40% gain in Qualcomm (QCOM, $39.87, down $0.56) yesterday. We aren’t too worried about what the outcome of the health bill will be because we can trade any kind of market.
If it looks like the market heads lower or is going to tank then we will start looking at put options. And this is the way you should think. Look, we will play the market higher if that is the case but most investors are scared to play in the market when it is going down. Don’t be.
You can make just as much money in a down market as you can in an up market.
All of our 2010 CLOSED trades will be updated after the bell today so look for an update over the weekend for those of you who haven’t joined us. For our current subscribers, let’s get to the Members Area for the updates…
We will be back with our Weekly Wrap Sunday Night and it is one you won’t want to miss. Hopefully, we will have the healthcare news by the time we go to press and what you can expect come Monday morning.
Tags: health care vote, Nike call options, NKE options, Obamacare vote, option picks, option signals, options alerts, QCOM, Qualcomm call options, stock options trading
Posted in Company Commentary, Market Analysis, Sectors | Comments Off