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Thursday, January 17th, 2013
12:40pm (EST)
Usually, when there’s smoke there’s fire and after a number of warning signals, the FAA (Federal Aviation Administration) stepped-in and grounded Boeing’s (BA, $74.31, down $0.03) 787 Dreamliners. The company must prove to the FAA that the lithium batteries they use in the aircraft are safe before they can resume operations in the U.S. There are only 6 planes that operate here in the States by the publicity will be a stinger and other carriers are following suit as the overseas carriers usually follow the FAA’s recommendations.
The batteries have been an ongoing concern for a couple of weeks now as a number of planes have experienced smoke and battery-fire issues. This has raised serious concerns about the safety of the batteries and the planes.
We talk about “spotting” these types of situations in our trading manual “How to Trade Options on Momentum Stocks” and we listed and profiled some put options for Boeing on Wednesday morning. Unfortunately, they gapped up at the open yesterday and doubled so we didn’t want to chase. Instead, we wanted to see a close below $74 before going short but shares held this level into the close.
The February 72.50 puts (BA130216P00072500, $1.55, up $0.05) traded up to $2.22 at the open when shares started the session at $72.78 this morning. They traded down another dime before recovering but we have also been watching the February 70 puts (BA130216P00070000, $0.85, flat) which soared to $1.40 on the open after closing at 83 cents yesterday.
We will be patient as there could be a longer-term setup but we may have to look at the May put options which will allow more time for a breakdown. Wall Street will try to prop up one of its beloved Dow components but shares could dip below $70 over the next few months and test the 52-week low of $66.82 if Boeing doesn’t resolve this issue quickly.
The January options expire tomorrow and in recent years the Friday before Martin Luther King Day has favored the bears. The market will be closed on Monday to observe the holiday so the close this week will be important.
We will talk about levels to watch for in tomorrow’s update but today’s action is pushing resistance with the S&P at new multi-year highs. The index is up 9 points to 1,482.
The Dow is up 90 points to 13,601 while the Nasdaq is higher by 19 points to 3,136.
Subscribers, we have another NEW TRADE today so let’s get on it.
Posted in Market Analysis, Option Trades, Strategies, Watch Lists | Comments Off
Friday, November 30th, 2012
12:40pm (EST)
The Dow started the month at 13,096 and the week at 13,009. The S&P was at 1,412 and 1,409 to start November and the week. The Nasdaq ended October at 2,977 while starting the week at 2,966.
Currently the Dow is down 15 points to 13,006 while the S&P is lower by 2 points to 1,413. The Nasdaq is showing a decline of 7 points to 3,005.
We talked about the bearishness of the last trading day of November over the past 15 years and that the chances of the market ending lower today was running at 75%. However, there is a bullish case for the last trading day of November during election years as the market has advanced 5 out of the last 6 election years.
Given this week’s action, it appears we could be locked into a trading range for a few weeks and we will have the charts for you on Monday.
We mentioned yesterday that our Track Record is 10-4 since late September and we are closing another trade today for a 45% profit. We still like all of our current trades but we want to continue to keep our portfolio light until we get a clear trend in the market.
As we close out November, we are looking for an exciting December that is normally a bullish month for the market. Our Track Record for 2012 is 147-54, or a 73% win rate, including the Weekly Wrap which is 26-0. Our portfolio is showing a tremendous profit for the year (up a staggering 760%!) and is proof of the hard work we do and the long hours put in to do the research.
We often hear how the Average Joe can’t make money in the market, or they got robbed on an IPO, or were left holding the bag on some other stock. Well, the problem is the Average Joe doesn’t do homework and he doesn’t do research or read charts. Our point is, trading the market for a month or two will never bring you long-term success but is possible to make an incredible amount of money if you do the homework – which is why you have us.
Option trading is risky and it should only be used with speculative accounts. Options require you to predict where a stock will be within a certain amount of time which is one of the hardest predictions to make on a daily basis. An option trader who picks 55% of his trades right will have a successful year and is considered a “pro” by Wall Street’s standards. The same with a professional gambler betting on football or basketball.
If you make the same bets in equal amounts it takes the emotion out of going overboard on one trade hoping to hit the homerun. The key is to hit a lot of singles and doubles along with the three-run dingers or grand slams. You will the occasional strikeout and a bad month here and there but if you are confident in your abilities then making money in the market is easy.
Our Weekly Wrap portfolio covers an array of companies, from small-caps to big-caps, and over the years we have profiled some incredible opportunities. We like to own solid stocks that can return us double-digit returns on a monthly basis. One of our covered calls trades returned over 100% this year. Since inception, this newsletter is 42-0.
We will be back Sunday night with our Weekly Wrap and Monday morning with our Daily. We will also update our Watch List for possible new trades. Until then, have a great weekend everyone.
Posted in Trading Psychology, Trading Tips, Watch Lists | Comments Off
Thursday, October 11th, 2012
9:00am(EST)
It appears the 4-week trading range the market has been in is ready to crack but it hasn’t been wise to count the bulls out as the dips have held all year long. However, this time feels a little different.
The Dow plummeted 128 points, or 0.95%, to end at 13,344. We have been mentioning the 13,350 level for a few weeks now as a possible breaking point but 13,200 needs to trigger to confirm a test to 13,000. The bulls will need to recapture 13,500 this week or things will get ugly. Wednesday’s low was 13,327 and the second-straight day of triple-digit losses.
The S&P 500 sank 9 points, or 0.6%, to settle at 1,432. We said on Monday to watch 1,435 as a sign for a trip to 1,425 and yesterday’s low was 1,430. If the bulls do not hold or buy the dip at 1,425 then we can almost count on seeing 1,400-1,375.
The Nasdaq tanked 13 points, or 0.4%, to finish at 3,051. We have talked repeatedly how 3,050 would come into play if 3,100 cracked and yesterday’s low of 3,046 clears the way for a drop down to 3,025-3,000 this week. A move back above 3,100 would be bullish but is looking like a tall order at this point.
Surprisingly, the Russell 2000 only fell a point and went out at 826. The small-caps showed some strength and held 820 but need to clear 830 to calm Wall Street’s worries. The S&P 500 Volatility Index ($VIX, 16.29, down 0.08) was also acting kind of funny amid the chaos and was basically flat, trading in a range of 16.13-16.79. These were bullish indicators and why the market could stay choppy.
Futures are showing a higher open so the bulls still have some fight left in them. Dow futures are up 51 points to 13,319 while S&P futures are higher by 8 points to 1,434. The Nasdaq 100 futures are advancing 17 points to 2,740.
We have a lot o cover this morning and we could be issuing New Trades and/ or Profits Alerts this morning so stay on the lookout if we decide to take action before our midday update. Subscribers, check the Members Area for our latest thoughts.
Posted in Market Analysis, Market Commentary, VIX, Watch Lists | Comments Off
Friday, August 31st, 2012
9:00am (EST)
The market closed right at support like we figured heading into today’s big event. We are pretty sure Ben Bernanke checked yesterday’s closes on the indexes so he is well aware what his carefully chosen words could mean for the market.
The Dow dropped 107 points, or 0.8%, to end at right at 13,000. The blue-chips traded in the red all session long and dipped to a low of 12,978. Today’s action could produce a 200-point swing on the Dow which would be the next wave of support for the bears (12,800) or a rebound back to resistance for the bulls (13,200).
The S&P 500 fell 11 points, or 0.8%, to settle at 1,399.48. The index traded to a low of 1,397 and could face a quick test to 1,375 on continued weakness after failing to hold the 1,400 level. The bulls could easily reclaim 1,410 or even 1,425 on bullish Bernanke comments.
The Nasdaq declined 32 points, or 1%, to finish at 3,048. Tech was unable to hold the 3,050 level and could test 3,025-3,000 on a continued pullback. A run back to 3,100 could be in the mix if the bulls get some good news.
The Russell 2000 closed at 808, down 9 points, or 1.1%, while the S&P Volatility Index ($VIX, 17.73, up 0.67) finished above 17.50.
Futures are showing a bullish open and look like this: Dow (+113); S&P 500 (+12); Nasdaq 100 (+27). Bernanke is no E.F. Hutton but everyone will be listening starting at 10am.
We have added several new possible trade candidates to our Watch List which could be opened once we get a good feel on what might happen. Subscribers, check the Members Area for the details and be on the lookout for New Trades or possible Trade Alerts if we need to take any action before our midday updateWe have added several new possible trade candidates to our Watch List which could be opened once we get a good feel on what might happen. Subscribers, check the Members Area for the details and be on the lookout for New Trades or possible Trade Alerts if we need to take any action before our midday update.
Tags: Bernanke Jackson Hole speech, best options newsletter, call options trading, VIX index
Posted in Market Analysis, Market Commentary, Sectors, VIX, Watch Lists | Comments Off
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Bulls Looking Weak
Thursday, October 11th, 2012
9:00am(EST)
It appears the 4-week trading range the market has been in is ready to crack but it hasn’t been wise to count the bulls out as the dips have held all year long. However, this time feels a little different.
The Dow plummeted 128 points, or 0.95%, to end at 13,344. We have been mentioning the 13,350 level for a few weeks now as a possible breaking point but 13,200 needs to trigger to confirm a test to 13,000. The bulls will need to recapture 13,500 this week or things will get ugly. Wednesday’s low was 13,327 and the second-straight day of triple-digit losses.
The S&P 500 sank 9 points, or 0.6%, to settle at 1,432. We said on Monday to watch 1,435 as a sign for a trip to 1,425 and yesterday’s low was 1,430. If the bulls do not hold or buy the dip at 1,425 then we can almost count on seeing 1,400-1,375.
The Nasdaq tanked 13 points, or 0.4%, to finish at 3,051. We have talked repeatedly how 3,050 would come into play if 3,100 cracked and yesterday’s low of 3,046 clears the way for a drop down to 3,025-3,000 this week. A move back above 3,100 would be bullish but is looking like a tall order at this point.
Surprisingly, the Russell 2000 only fell a point and went out at 826. The small-caps showed some strength and held 820 but need to clear 830 to calm Wall Street’s worries. The S&P 500 Volatility Index ($VIX, 16.29, down 0.08) was also acting kind of funny amid the chaos and was basically flat, trading in a range of 16.13-16.79. These were bullish indicators and why the market could stay choppy.
Futures are showing a higher open so the bulls still have some fight left in them. Dow futures are up 51 points to 13,319 while S&P futures are higher by 8 points to 1,434. The Nasdaq 100 futures are advancing 17 points to 2,740.
We have a lot o cover this morning and we could be issuing New Trades and/ or Profits Alerts this morning so stay on the lookout if we decide to take action before our midday update. Subscribers, check the Members Area for our latest thoughts.
Posted in Market Analysis, Market Commentary, VIX, Watch Lists | Comments Off