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Archive for the ‘Stock Earnings’ Category

Garmin Tanks On Lower Margins

Wednesday, February 24th, 2010

12:35pm (EST)

The market is trying to rebound from a two-day slide and has held up well after hearing Federal Reserve Chairman Ben Bernanke tell Congress that low interest rates are still needed to support the economy.  He also added that interest rates will probably remain low for an extended period to allow more time for an economic recovery.

The Commerce Department said sales of new homes fell to a record low in January as Wall Street had been expecting an increase.  New home sales fell a whopping 11.2% last month to a seasonally adjusted annual sales rate of 309,000 units versus a forecast of 360,000.  This was the lowest level on a record in nearly 50 years.

The Department of Energy released its inventory report which showed a larger than expected build up of crude oil, but a larger than expected draw down of gasoline.

As a result, the Dow is currently up 85 points to 10,367.  The Nasdaq is higher by 22 points and is at 2,236 while the S&P is up 9 points to 1,103..

In earnings news, Garmin (GRMN, $31.99, down $2.46) is getting a haircut despite beating Wall Street’s estimates.

GRMN - 60 Minute Chart

GRMN - 60 Minute Chart

The company earned $278 million, or $1.38 a share versus $158 million, or $0.78 a share, during the year ago period.  More importantly, Garmin also said it sees its NuviFone operating margins to be slightly negative in 2010.

We have mentioned Garmin often in this space over the last few months and yesterday we profiled an earnings trade to take advantage on a possible move lower.  We knew the company would beat estimates but like we told our readers yesterday, Garmin is the next Blockbuster (BBI/B, $0.26, down $0.03).

Garmin has made a niche for itself in the navigation field but there is just too much better and cheaper competition that continues to eat away at the company’s margins.  Here is what we said yesterday in our Members Area:

“Garmin reports earnings on Wednesday and we have talked about Garmin in the past.  A recent stroll in our neighborhood showed the latest Garmin devices selling at 50% discounted prices and there were a TON of them.  It looked liked the same display that has been up at Christmas…

The company is in a dying business as simple, easier ways of navigation are now available.  Google and Nokia said they will offer free turn-by-turn navigation on mobile phones and we are sure other applications will continue to be far cheaper than Garmin’s products.”

Current subscribers who acted on those comments are up 75%-100% today on a put option trade.  Yes, earnings trades are risky but if you can read the hidden message before a company reports then you have a chance at a pretty good payday.

We have updated all of our trades, including Garmin, so please check the Members Area NOW

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MomentumOptionsTrading.com Weekly Wrap for 2/21/10

Sunday, February 21st, 2010

Bulls Make Another Run

8:00pm(EST)

The futures were pointing towards a nasty opening for the market early Friday morning but things got better as the bulls starting rising with the sun. 

Thursday’s surprise discount rate hike by the Fed after the market closed scared the be-Jesus out of everyone as the Asian markets tanked and the Dow futures were down 90 shortly after midnight.  However, the Fed may have done the bulls a big favor as they were able to take the market higher for the fifth day in a row.

We rarely talk about the specific indexes of the foreign markets but we often watch the action as they can and do have an effect on our markets.  Hong Kong’s stock market is known as the Hang Seng and it tanked 2.6% on our Fed news and closed at 19,894, down 528 points, on Friday.  Japan’s Nikkei fell 2.1%, or 212 points, and closed at 10,123.

A 2% drop in the Dow would have crushed the current rally but the Fed news was softened by the fact that the market had all night and some of the morning to figure out this really wasn’t a big deal.  A better-than-expected consumer prices report also gave the bulls a lift.

The Dow traded in a narrow range for most of the day and ended at 10,402, up 9 points.  The S&P and Nasdaq hit a “double-deuce” as each index gained 2 points and closed at 1,109 and 2,243, respectively.

It was a great week for the bulls as the Dow added 303 points, or 3%, and closed above 10-4 for the first time in over a month.  It was also the Dow’s biggest weekly point and percentage gain since the start of November. 

The S&P 500 was up 34 points last week, or 3.1%, and closed above the all important 1,100 level.

Finally, the Nasdaq jumped 60 points for the week, or 2.8%, and settled above 2,200 for the first time in a month.

We are back in that “upper” trading range we have been talking about for weeks and months which for the Dow are between 9,700 and 10,700.  Once again, the targets we set back in August will now come into play again and they are at 1,175 for the S&P 500 and for the Nasdaq our target is 2,275.  For the Dow, we have a target of 10,800. 

The S&P traded 1,150; the Dow hit a high of 10,767; and the Nasdaq reached 2,326…all by mid-January which brings us to our next point. 

The market was an easy read in 2008 as the Dow collapsed from 13,338 to a low of 7,392 by November.  The Nasdaq fell from a high of 2,661 to a low of 1,295 by October of that year.  Folks, that is a 50% haircut.

In 2009, the Dow rebounded off a low of 7,856 to a high of 10,605 while the Nasdaq soared from 1,476 to a high of 2,295.  As you can see, this basically amounts to 50% gains which shows us two things.

In 2008, it was easier to trade put options and make money on the way down.  Our track record shows this.  In 2009, we mainly recommended call options.  As we release our results for 2010 for all of our closed trades you will see our track record is around 60% for our trades.

It’s possible to make a good living if you hit 60% of your trades but we are more accustomed to hitting over 70% of our trades.  The good news is that we aren’t ashamed of hitting 60% of our trades but we wanted to show you the “transition” the market is currently going through. 

We saw this in mid-January when the market was approaching our targets and we knew we would either “breakout” or “retreat” from current levels.  We still trade, regardless of market conditions, but we protected ourselves by going out to May, June and September with some of our call options trades.  We have also used put options this year because when the market is this choppy and with this volatile, you need protection.

Even better news, is that there will be a pure play on the trend over the next few months as we think the volatility continues.  We still think there is a chance the bulls push through our targets but we wouldn’t be surprised at all if we touch those targets and fade.  If the market fades again, then the bears will take center stage.  

As far as our portfolio, we are trying to preach these market conditions but IT IS a tougher market to trade and we do not send out trades just to grow our subscriber base.  In fact, many of you know we will be limiting our membership to 1,000 subscribers because we don’t want to be like other option newsletters.  One of our recent subscribers said that he was with another service which sent out 14 straight losing trades from mid-January up until now.  The problem was his service dropped coverage of the trades and never responded to his emails about the current trades.  Folks, we don’t roll that way.

We thought we would take some time to talk about the current market conditions and the trading atmosphere we are in to give you a better perspective on things.  That said, we remain extremely excited because the current volatility will continue to offer us some fat trading opportunities but there will be risks.  

Looking ahead to this week, we have a number of events that will be headwinds for the market.

Toyota’s (TM, $73.35, down $0.09) President changed his mind and will testify at a congressional hearing on Wednesday about the company’s recent recalls.  The House Oversight and Government Reform Committee is investigating Toyota’s recall of more than 8.5 million vehicles for gas-pedal and sudden-acceleration problems.

Federal Reserve Chairman Ben Bernanke will be in front of Congress again on Wednesday and Thursday to give his semi-annual monetary policy report to Congress.

There will be some economic news the market will have to digest as well.  The government will release new homes sales data for the month of January on Wednesday, while the National Association of Realtors will report its data for existing home sales on Friday.

We will be back in the morning with a fresh outlook and a complete update for all of the current trades.  We are also looking at a number of stocks that we will be adding to our Watch List.

As we head to press, Dow futures are up 26 points…

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Toyota’s Woes Continue

Thursday, February 18th, 2010

12:10pm (EST)

The bulls are still running, albeit at a slow pace, as the market is higher for the third consecutive day.  The Dow is currently enjoying a 20 point pop and is at 10,328.  The S&P 500 is back at 1,100 and is up a point while the Nasdaq is higher by 4 and is trading at 2,229.

The Dow started off in negative territory but got a lift after the Philadelphia Federal Reserve Bank said its business activity index rose to 17.6 from 15.2 in January.  It was better-than-expected news as new orders jumped to their highest in more than five years.  The boys on the Street were expecting a reading of 17.

Elsewhere, the index of leading economic indicators rose 0.3% last month but was weaker than the 1.2% rise in December and a 1.1% rise in November.  It was also the smallest of the index’s 10 straight monthly gains and short of the 0.5% growth that was expected.  Despite the weaker-than expected results, it still showed that the economy continues to chug along.

Toyota Motors (TM, $73.71, down $0.39) continues to feel the heat as another model has been called into question.  The Corolla may have a potential power-steering problem that could involve up to a half million vehicles.

toy

The U.S. Transportation Department plans to open a formal investigation despite Toyota saying it has received fewer than 100 complaints with the Corolla, the world’s best-selling car.

This could put Toyota’s recalls in the double-digit millions…the company has already recalled 8.5 million of its cars because of problems with sticking gas pedals, floor mats and braking systems.

We wanted to send today’s update out a little early because we have a NEW TRADE that we profile in our Members Area.  The options are already up 10% but we think we can squeeze a double out of the trade by mid-March.

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Greece Getting A Gift

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.    

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MomentumOptionsTrading.com Weekly Wrap for 1/24/10

Sunday, January 24th, 2010

10:00pm (EST)

The market continued its sell-off on Friday as the Dow dropped another 216 points to close at 10,172.  The bears woke up on Wednesday from a long rest and have caused panic and fear for some investors.  The Dow’s 550 point drop in 3 days marked its worst week since March 2008.

Perhaps the biggest bomb was dropped by the President who seems to have a personal vendetta against the financial companies.  We kept quiet on the subject but we really think Washington is picking the wrong battles.  Instead, they should concentrate on “shovel-ready” projects that will bring unemployment back below 10%.

The market’s decline has been broad-based and Friday’s drop can be attributed to Ben Bernanke not possibly getting a second term as Fed chairman.  His gig expires at the end of the month and now there is serious doubt he gets the 60 votes he needs. 

The S&P 500 fell 25 points and closed at 1,091 while the Nasdaq tanked 60 points, or 2.7%, to finish at 2,205.

A week ago right here in this space we said there was chance we get a 5%-10% and we got the 5%.  We still think there is some weakness in the market but we are expecting one last rally by the bulls. 

As we head to press the futures have turned around as the overseas markets get ready to trade in a few hours.  Dow futures are up 42 points, the S&P 500 and Nasdaq futures are up 6.  The heart of earnings season will hit this week and if you look at the list below there will be some action (quotes are from Friday’s close):


Monday:  (Before the bell)  AK Steel Holding (AKS, $20.19, down $1.03), Eaton (ETN, $65.88, down $0.86), Halliburton (HAL, $31.15, down $1.38)

(After the bell)  Amgen (AMGN, $56.60, down $0.03), Apple (AAPL, $197.75, down $10.32), Jacobs Engineering (JEC, $39.66, down $0.24), VMware (VMW, $41.58, down $2.36)

Tuesday:  (Before the bell)  Baker Hughes (BHI, $44.27, down $2.36), Corning (GLW, $18.56, down $1.05), DuPont (DD, $32.50, down $0.65), Johnson & Johnson (JNJ, $63.20, down $0.77), Peabody Energy (BTU, $45.10, down $0.60), Sherwin-Williams (SHW, $58.00, down $0.61), Travelers Companies (TRV, $48.31, down $0.64), Wynn Resorts (WYNN, $63.95, down $1.42)      

(After the bell)  Callaway Golf (ELY, $8.25, down $0.10), DeVry (DV, $56.88, up $0.42), Gilead Sciences (GILD, $46.08, up $0.30), QLogic (QLGC, $19.19, down $0.50), Yahoo (YHOO, $15.88, down $0.32)

Wednesday:  (Before the bell) Abbott Laboratories (ABT, $54.51, down $1.05), BlackRock (BLK, $225.00, down $5.24), ConocoPhillips (COP, $50.60, down $1.64), Piper Jaffray (PJC, $46.20, down $1.80), Valero Energy (VLO, $18.18, down $0.72) 

(After the bell) Green Mountain Coffee Roasters (GMCR, $81.16, up $1.24), Harris (HRS, $45.78, down $1.46), Qualcomm (QCOM, $46.78, down $1.31), WellPoint (WLP, $65.10, down $0.40) 

Thursday:  (Before the bell) 3M Company (MMM, $81.48, down $1.22), Altria Group (MO, $19.71, down $0.18), AT&T (T, $25.39, down $0.28), Colgate-Palmolive (CL, $80.71, up $1.64), Eli Lilly (LLY, $35.52, down $0.59), Ford Motor (F, $10.52, down $0.66), Lockheed Martin (LMT, $75.58, down $1.40), Nokia (NOK, $12.72, down $0.18), Potash (POT, $109.05, down $3.59), Time Warner Cable (TWC, $43.84, down $1.04), Under Armour (UA, $26.63, down $0.71)

(After the bell)  Amazon.com (AMZN, $121.43, down $5.19), Genworth Financial (GNW, $12.41, down $0.49), Juniper Networks (JNPR, $24.95, down $1.17), Microsoft (MSFT, $28.96, down $1.05), Rambus (RMBS, $24.74, up $0.72), SanDisk (SNDK, $28.39, down $0.97), Stanley (SXE, $27.74, up $0.14)

Friday:  (Before the bell) Arch Coal (ACI, $24.80, down $0.51), Honeywell (HON, $39.88, down $0.85), Mattel (MAT, $19.95, down $0.63)

(After the bell)  Horizon Lines (HRZ, $6.17, down $0.03)


This will be an important week for the bulls and we don’t expect them to go away quietly.  We said back in December there could be an “epic battle” between the two sides and so far we have been dead-on with our market analysis.  We have used caution to establish some long-termer term option plays and we have some insurance in our portfolio for protection. 

If the market does continue lower there will be some incredible opportunities to buy put options on stocks that are overbought.  Some of the high-flying stocks have already been clipped and there is plenty of downside to go if they are going to correct.

We will be back in the AM with the trade updates and the morning outlook. 


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Trader Comments:

    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!

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    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!

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    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!

    JOE G.
    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. :) ”

    CHRISTIAN
    “Your service rocks! I made bank on Dendreon last week! The other thing I have to say is that it took me quite a while to find a REAL options trading service like yours. Most of what’s out there is 99% scam and very sketchy. Momentum Options Trading is the first service I found that I can trust and seriously make money with.”

    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.”

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    “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.”