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Friday, June 17th, 2011
8:30am (EST)
We did our Research and we tried to get Wall Street In Motion…
The market went on another wild ride on Thursday as the bulls and bears battled to a draw after the major indexes finished mixed.
The Dow gained 64 points to finish at 11,961 after trading to a high of 11,990. The S&P 500 added 2 points and closed at 1,267 after kissing a high of 1,275. We mentioned resistance yesterday at 12,000 and 1,300, respectively, so those levels will need to be penetrated and held today for the bulls to feel good about the weekend. If not, Monday could a key day for the market.
The Nasdaq, however, finished lower by 8 points to settle at 2,623. The index spent much of the morning session in positive territory and traded up to 2,642 before fading. We have outlined resistance at 2,650 all week and the bulls will at least need to hold 2,600 or next week could get nasty.
We took the drop in Tech as a sign that Research In Motion (RIMM, $35.33, up $0.16) was going to report a lousy quarter although we had already predicted they would. When shares were halted after the bell, we felt good, but still nervous. However, because we recommended closing half of the trade when it was up 80% on Wednesday we knew the worse-case scenario was a small loss and the best-case outcome would be if shares continued to tank.
On May 9, 2011 – RIMM was just above $45 and our weekend chart work was showing a drop from $45 to $40 which is where we said $38 would come into play. Once penetrated, we said a drop to the lows $30’s could be in the cards. Here were our exact comments and a dummied-down chart from that Monday morning before we recommended put options the very next day:
“Thoughts: (RIMM, $45.99, down $1.30) – Shares made a major break below long-term support on Friday (purple circle). The second wave of support is in the $38 area (green line, yellow circles) which gets the July puts to a least a double. However, there is virtually no support until the low $30’s if the $38 level fails (red line). Here is an updated chart:
(END)”
Well, we rolled out the red carpet, or should we say red line, for the company and they were right on cue.
RIMM beat estimates by a penny which was not surprising given how low the bar was, but, we have been saying they would lower guidance and they missed on their revenue numbers. RIMM reported a profit of $1.33 versus $1.32 but revenue came in at $4.91 billion against a forecast for $5.15 billion. They lowered their current quarterly and yearly earnings outlook.
Shares traded below $30 last night and finished at $30.26, down $5.07, and are at $29.25, down $6.08, in pre-market action this morning.
We have been telling our subscribers this horse was dead and it was not getting back up. After checking the charts and banking 60% on our first RIMM trade, we went back to the well for more. Our current put option trade should hit a triple-digit return today.
We will be back at midday with our next update but look for a Trade Alert AND a possible NEW TRADE before then if we see something we like or we take profits on some of our current trades this morning. We mentioned yesterday the market is setting up for some nice pin action over the next few weeks and into July. We expect to take full advantage of the current volatility.
Futures are pointing towards a slightly higher open…Dow futures are higher by 86 points to 11,985 while the S&P futures are up 11 points to 1,275. The Nasdaq futures are advancing 15 points to 2,210.
We have a lot to cover inside our Members Area so let’s get on it. Subscribers, check for the updates.
Tags: call options, futures options, high beta stocks, Hot stocks, momentum options, Momentum stocks, NASDAQ: RIMM, option market, option tips, options, options mentoring, options trading course, Research In Motion downgrades, RIMM's earnings miss, stock market options, weekly options, what are options
Posted in Earnings, Market Commentary, Strategies | Comments Off
Tuesday, June 14th, 2011
9:00am (EST)
We didn’t expect much from Monday’s action as economic news was light and earnings are winding down to a trickle ahead of July’s big 2Q announcements. As such, the market ended flat for the session but we expect the action will pick up starting this morning as we have a number of headlines to report.
The Dow traded to a high of 12,011 but could only manage a 1 point gain and finished at 11,953. It was the Blue-Chips second-straight finish below 12,000 which has now become short-term resistance ahead of 12,200. Caterpillar (CAT, $95.44, down $1.35) and Hewlett-Packard (HPQ, $34.65, down $0.48) weighed on the index and accounted for 14 negative points. Short-term support remains 11,800-11,750.
We profiled Caterpillar last Monday inside our Members Area when shares were at $101 and said a test to $95 was coming, quickly. The July 95 puts (CAT110716P00095000, $3.20, up $0.45) were at $1.90 when we profiled the upcoming drop and the stock was at $101. Although it wasn’t an “official trade” the puts are up nearly 70% in a week which is where we would have taken profits.
As far as Hewlett-Packard, it looks like a falling knife we aren’t about to catch after hitting a fresh 52-week low of $34.60. We will have to check the chart but if further weakness is in store, we might have to add some put options to our Watch List.
The S&P 500 also added a point and settled at 1,271 after reaching a high of 1,277. The bulls were looking to hold 1,275 but still face pressure down to 1,250. Resistance is at 1,300 and then 1,325.
The Nasdaq slipped 4 points and closed at 2,639 after trading to an intraday low of 2,629. Short-term support is at 2,600-2,550 while resistance will come into play at 2,675-2,700.
Futures are soaring on a number of better-than-expected economic reports this morning and Best Buy (BBY, $28.82, up $0.39) is looking to open higher after beating Wall Street’s with their latest quarterly results. We will cover these stories in our afternoon update.
Dow futures are up 100 points to 11,985 while the S&P futures are showing are advancing by 14 points to 1,280. The Nasdaq futures are up 20 points to 2,240. We have a couple of MONSTER trades we are on the verge of closing which are up over 150% and 200%, respectively. We also have a few other option trades that we are also expecting to do well this week.
If you haven’t signed up with us yet or are nervous due to the current market volatility then don’t be. Remember, you can make just as much with put options in a lower trending market as you can with call options in a higher trending market so don’t be scared. Come get some action!
Subscribers, check the Members Area for the updates.
Tags: BBY, call options, CAT, high beta stocks, Hot stocks, HPQ, momentum options, Momentum stocks, option tips, options, options mentoring, options trading course, stock market options, weekly options
Posted in Market Analysis, Strategies, Trade Update | Comments Off
Thursday, June 2nd, 2011
1:20pm (EST)
The bears have pushed the market lower and the major indexes are right where we figured they would be heading into tomorrow’s jobs report. Economic news was decent before the bell and the futures held up after hearing Initial Claims came in at 422,000, which was down 6,000 from the prior week but better than the expected forecast of 413,000. Not too bad. Continuing Claims fell just slightly from 3.712 million to 3.711 million.
Elsewhere, Factory Orders showed a 1.8% pop versus expectations for an increase of 1.6%. Labor Costs increased by 0.7%, which is slightly lower than the 0.9% increase that had been penciled in.
Turning to earnings, Joy Global (JOYG, $91.07, up $5.19) is up over 6% after beating Wall Street’s estimates. The company reported profits of $162 million, or $1.52 a share, versus $120.4 million, or $1.15 a share, in the year-ago period. Revenues jumped to $1.06 billion, up from $896.2 million.
The suit-and-ties had expected earnings of $1.35 a share on revenue of $1.03 billion.
Going forward, Joy Global also lifted its full-year forecast and now expects to report profits of $5.30- $5.60 a share on about $4.2 billion in revenue, up from a previous forecast of $5.10- $5.40 and $4.1 billion.
Shares have traded to an intraday high of $91.89 and the 52-week high is $103+. We figured shares would be on the move and we highlighted the stock as a potential earnings trade in our Weekly Wrap. Although this publication is a little more conservative, it also serves as homework for those of you who have purchased our options trading course, How to Trade Options on Momentum Stocks.
We BOLD the companies each week that we think are going to move 5%-10% (or more) on an earnings announcement. This week we had Dollar General (DG, $31.99, up $0.18) at $34.66, and Vera Bradley (VRA, $40.94, down $6.72) which was at $50 to start the week making drops.
Dollar General fell over 10% yesterday, and Vera Bradley is getting taken out to the woodshed. We have a few stocks we are eying today after the bell that could be making moves of 10% or more.
We talk about them in the Members Area but we doubt we take any action on the options we have profiled.
Our point is, some of our students are hitting massive homerun trades by playing some of these earnings announcements and they are learning to do so by reading our option trading manual and watching our training videos. Folks, you owe it to yourself to learn how the markets work and we make it easy for you when you purchase our options trading course. Email us if you have further questions.
Our current trades have played out well and we waiting until after Friday’s nonfarm payroll numbers and unemployment rate to hit the Street to see where the market could be headed. We would love to see a blow-off the roof type rally tomorrow and the only other two scenarios are this; flat or lower.
As we head to press, the Dow is down 33 points to 12,257 and has kissed a low of 12,192. The S&P is lower by 2 points to 1,313 and has dipped to 1,305 but holding 1,300. The Nasdaq has just turned positive by a point and is at 2,770 after touching a low of 2,759.
We have a lot to cover in our Members Area so let’s get on it. We will be back in the morning with the BIG update.
Tags: call options, DG, high beta stocks, Hot stocks, JOYG earnings, momentum options, Momentum stocks, NYSE:DG, option tips, options, options mentoring, options trading course, stock market options, VRA, weekly options
Posted in Earnings, Strategies | Comments Off
Wednesday, May 4th, 2011
8:50am (EST)
The market ended mixed on Tuesday after the bulls battled back by the close to square things up. The bears ruled much of the session and took a bite out of Tech which was down more than 1% intraday before losing their grip by the closing bell.
The Dow traded in a tight 90-point range before finishing less than a point higher at 12,807. The high was 12,840 while the low was 12,749. Short-term support is at 12,700-12,600 while resistance is up ahead at 13,000.
The S&P 500 traded to a high of 1,360 but the low of 1,349 was a hair under our 1,350 support target. The index ended lower by 4 points to 1,356 by the close. A breakdown here leads down to 1,334-1,325 while 1,375 will remain in play for a possible trip to 1,400 as resistance.
The Nasdaq was in the green for all of 6 seconds after the opening bell and spent the entire day swimming in red ink. The bears were able to take the index below 2,850 and down to 2,825 before settling with a loss of 20 points which put Tech at 2,840. Tech is 6% away from hitting Nasdaq 3,000 but it appears we might get a 6% move the other way if the bears have their say. A move back below 2,700 and down to 2,675 would represent the perfect buying opportunity in our minds so let’s see how it plays out.
We should also note a 6% correction or pullback on the S&P puts the index at 1,275 while a 6% correction in the Dow would mean 12,000 for the blue-chips. A 6% pop in the S&P would mean 1,440-1,450 while a 6% jump in the Dow gets it to 13,600 from current levels.
If we were in Vegas and were betting on the over/ under – or if we were on Jeopardy – we would take the Bears for $400, Chuck. These downside targets represent major support levels which were resistance as we outlined them during the bull run that has lasted since October 2010.
The good news, if you are bullish, is that we still expect the major indexes to close near our targets of Dow 14,000; S&P 1,450-1,500; Nasdaq 3,400 for 2011. We went on record with these targets on January 19, 2011 for those of you keeping tabs.
And this just in…we have an option trade on our Watch List this morning that could return 670% by mid-September if we are right. In other words, a $65 investment in one option contract could be worth $500 in 4 months or $650 (10 contracts) could turn into $5,000. The options are at 65 cents and could hit $5 and we may release the trade TODAY if we close one of current ones out. Folks, they say a picture is worth a thousand words. Well, we hope the chart we show you today is worth $5,000.
We also have a lot more charts to cover in our Members Area on where we think the market is headed over the next 6 months and for May so we have to roll. Subscribers, check for the updates.
If you are not a subscriber but would like to see the incredible opportunity before your eyes, click here.
Tags: call options, high beta stocks, Hot stocks, momentum options, Momentum stocks, option tips, options trading course, stock market options, strangle option trades, weekly options
Posted in Hot Stocks, Strategies | Comments Off
Tuesday, May 3rd, 2011
1:15pm (EST)
Every once in a while we get excited about Initial Public Offerings (IPO’s) because they are stock offerings on good or great companies which allow you to invest in them. Of course, the ones with the best prospects are hard to get in to as many of the brokerage firms offer them to the wealthier investors. The run-of-the-mill IPO’s can be had on the cheap and some IPO’s are simply overhyped, undervalued, or somewhere in between.
We aren’t sure where Renren lies but China’s largest social network will be going public this week in hopes of raising up to $750 million. The Facebook clone hopes to boost its profile with 53 million American Depositary Receipts (ADR’s) at $12-$14 and will trade under the ticker symbol “RENN”. Expectations are already up as original prices called for a range of $9-$11 a share.
If shares are priced in the upper range, it is possible Renren would be valued at nearly triple that of Facebook. In 2010, Renren had revenue of about $75 million but a net loss of $60 million. Renren has nearly 120 million registered users but the biggest difference between the two? Facebook is currently banned in the world’s second-largest economy but is trying to get in the back door through Baidu (BIDU, $141.37, down $6.10).
While there is risk in the Chinese internet sector, Renren seems like the sharpest tool in the shed. With the market getting increasingly competitive, there are more than 100 social networking sites operating, Renren could command an even higher premium.
We won’t be buying the hype though but instead we will wait a few months to see if there is an option trade. IPO’s don’t normally list options during the first few weeks or months of trading and sometimes when they do become available, they are thinly traded or have super inflated premiums.
As far as the market action for today, things are tight. The Dow is up 2 points to 12,809 while the S&P is down 5 points to 1,356. The Nasdaq, however, is getting punished for a loss of 25 points and is at 2,839. Subscribers, check the Members Area for some more thoughts on our current trades.
Tags: Baidu options, call options, Facebook options, high beta stocks, Hot stocks, momentum options, Momentum stocks, option tips, options trading course, RENN, Renren, stock market options, strangle option trades, weekly options
Posted in IPOs, Strategies | Comments Off
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RIMM Shares Rattled After Missing Revenue, Lowering Guidance
Friday, June 17th, 2011
8:30am (EST)
We did our Research and we tried to get Wall Street In Motion…
The market went on another wild ride on Thursday as the bulls and bears battled to a draw after the major indexes finished mixed.
The Dow gained 64 points to finish at 11,961 after trading to a high of 11,990. The S&P 500 added 2 points and closed at 1,267 after kissing a high of 1,275. We mentioned resistance yesterday at 12,000 and 1,300, respectively, so those levels will need to be penetrated and held today for the bulls to feel good about the weekend. If not, Monday could a key day for the market.
The Nasdaq, however, finished lower by 8 points to settle at 2,623. The index spent much of the morning session in positive territory and traded up to 2,642 before fading. We have outlined resistance at 2,650 all week and the bulls will at least need to hold 2,600 or next week could get nasty.
We took the drop in Tech as a sign that Research In Motion (RIMM, $35.33, up $0.16) was going to report a lousy quarter although we had already predicted they would. When shares were halted after the bell, we felt good, but still nervous. However, because we recommended closing half of the trade when it was up 80% on Wednesday we knew the worse-case scenario was a small loss and the best-case outcome would be if shares continued to tank.
On May 9, 2011 – RIMM was just above $45 and our weekend chart work was showing a drop from $45 to $40 which is where we said $38 would come into play. Once penetrated, we said a drop to the lows $30’s could be in the cards. Here were our exact comments and a dummied-down chart from that Monday morning before we recommended put options the very next day:
“Thoughts: (RIMM, $45.99, down $1.30) – Shares made a major break below long-term support on Friday (purple circle). The second wave of support is in the $38 area (green line, yellow circles) which gets the July puts to a least a double. However, there is virtually no support until the low $30’s if the $38 level fails (red line). Here is an updated chart:
(END)”
Well, we rolled out the red carpet, or should we say red line, for the company and they were right on cue.
RIMM beat estimates by a penny which was not surprising given how low the bar was, but, we have been saying they would lower guidance and they missed on their revenue numbers. RIMM reported a profit of $1.33 versus $1.32 but revenue came in at $4.91 billion against a forecast for $5.15 billion. They lowered their current quarterly and yearly earnings outlook.
Shares traded below $30 last night and finished at $30.26, down $5.07, and are at $29.25, down $6.08, in pre-market action this morning.
We have been telling our subscribers this horse was dead and it was not getting back up. After checking the charts and banking 60% on our first RIMM trade, we went back to the well for more. Our current put option trade should hit a triple-digit return today.
We will be back at midday with our next update but look for a Trade Alert AND a possible NEW TRADE before then if we see something we like or we take profits on some of our current trades this morning. We mentioned yesterday the market is setting up for some nice pin action over the next few weeks and into July. We expect to take full advantage of the current volatility.
Futures are pointing towards a slightly higher open…Dow futures are higher by 86 points to 11,985 while the S&P futures are up 11 points to 1,275. The Nasdaq futures are advancing 15 points to 2,210.
We have a lot to cover inside our Members Area so let’s get on it. Subscribers, check for the updates.
Tags: call options, futures options, high beta stocks, Hot stocks, momentum options, Momentum stocks, NASDAQ: RIMM, option market, option tips, options, options mentoring, options trading course, Research In Motion downgrades, RIMM's earnings miss, stock market options, weekly options, what are options
Posted in Earnings, Market Commentary, Strategies | Comments Off