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Friday, July 30th, 2010
1:00pm (EST)
We have a lot to talk about today so we are going to throw the kitchen sink at you…
The market is once again choppy as a both the bulls and bears try to gain leverage ahead of the weekend and before Monday’s opening bell. The bears started off strong and had pushed the major indexes down over 1% but the bulls made it back to even and into positive at one point. Trading has been back and forth since.
Economic news is abundant today.
The bears used the latest GDP figure to take the market sharply lower at the open as data showed the economy grew 2.4% in the second quarter versus a forecast of 2.6%.
The bulls used a collection of good news to stage a comeback. The Chicago PMI for July was 62.3 versus expectations of 56.0 while the Consumer Sentiment Survey for July was 67.8 versus the anticipated 67.5 print Wall Street had penciled in.
As a result, the market is mixed as the Dow is down 15 points to 10,452 while the S&P 500 is down 1 point to 1,100. The Nasdaq is up 3 points to 2,254.
Next week is setting up to be an even bigger battle as we have seen the volatility pick up and we have watched the bears stand ground. It’s not to say the bulls won’t break through these hard resistance levels but if Vegas had a line on Monday’s action we would put a $20 on a lower Monday.
Earnings will be another key element in next week’s direction as well as economic news but we could see some explosive moves before today’s closing bell as mutual funds dress up the month and traders square up the books for July.
Our Watch List is PACKED with potential bearish and bullish trades and we have even profiled some LEAP options out until 2012 that we eyeballing. This weekend we will also be taking a closer look at Best Buy (BBY, $34.57, up $0.02) and Chesapeake Energy (CHK, $20.94, down $0.16), two beaten down stocks that look “interesting” at these levels. We also take a look at Gold and what is happening with it. We are expanding our Weekly Wrap to provide you more coverage of the market and a few stocks here and there.
We are also pleased to announce we have HARD copies of our trading manuals How to Trade Options on Momentum Stocks and Watch List Overview. This option course has been two years in the making and we are excited to show you how you too can find triple-digit return trades and set up Watch Lists to follow hundreds of stocks at once.
We are going to show you how we look at trades, how to figure out the returns on where a stock needs to be and how to read a few charts. And much more golden nuggets.
We will update all of this on Sunday in our Weekly Wrap so look for details over the weekend. Next week will be nail-biting and we will set you up on what to watch for. We have also updated our current trades including the one from this morning in our Members Area so make sure you check the latest up-to-the-minute updates.
Until then, have a good weekend!
Tags: BBY, Best Buy, call options, CHK, Gold, Gold stocks, how to trade options, momentum options trading, Momentum stocks, option picks, option stock picks, options alerts, options newsletter, options track record, put options, stock options trading, volatile options
Posted in Company Commentary, Trading Psychology, Trading Tips, Watch Lists, Weekly Wrap | Comments Off
Sunday, July 11th, 2010
2Q Earnings Season Starts On Monday
4:30pm (EST)
The bulls had a stellar week after taking a beating from the bears that pushed them to the brink and had the major averages on the verge of a collapse. The market spent much of Friday near the breakeven line before a late day rally pushed the indexes firmly into positive territory. The rally was impressive and came during a holiday-shortened week and on lighter-than-normal volume. We also saw rallies into the close instead of sell-off’s but can the rally be trusted?
The Dow added 59 points on Friday, or 0.6%, to settle at 10,198. It was the index’s best week so far in 2010 as the Dow popped 511 points, or 5.3%. However, to put things in perspective, the index fell 457 points, or 4.5%, the week before. Here is what we said Friday morning:
“The recent trading range has been 9,800 through 10,600 with 10,200 providing a pivot point. The low was 9,600 set last week. The 500 point rally off the lows has been violent and unpredictable to say the least.”
Folks, when we said volatility would be picking up, we weren’t kidding. The Dow closed just 2 points away from our “pivot point”. The next level the bulls will be eyeing is 10,400 then 10,600 and support will come in at 10,000 and 9,800.
The S&P 500 ended the week with an 8 point gain, or 0.7%, to finish at 1,077. The index was able to tack on 55 points, or 5.4%, for the week after falling 54 points, or 5%, the prior week. We mentioned the 1,075 level would come into play on Friday and we were also 2 points off from nailing the close. Watch for a test of 1,100 to the upside and 1,050 again to the downside.
The Nasdaq had the best showing on Friday, adding 21 points, or 1%, to close at 2,196. Although the 2,200 level acted as slight resistance, we are watching the 2,240-2,250 area to change our bearish sentiment. For the week, the index added nearly 105 points, or 5%, after dropping 130 points, or 6%, the week before.
Turning to black and yellow gold, oil also surged higher throughout the week and ended at $76 per barrel while gold finished at $1,210 an ounce. The rally in oil marked an impressive 5.5% gain for the week - its best weekly finish in nearly six weeks. The gold bugs got excited when the commodity dipped below the $1,200 level which garnered some buying but added just 0.2% for the week, overall.
The VIX fell to 24.98, down 0.73, or 2.8%, and closed below 25 for the first time since June 21. The euro, which we are watching like a hawk, has seen a powerful rally over the past month and is at $1.264 versus the dollar. We have the CurrencyShares Euro Trust (FXE, $126.00, down $0.50) on our Watch List and said $1.27 should act as resistance.
To make a long story short, the market was due for a bounce and we only mention these key levels to put things in perspective for you. It is important to try and keep track of where support and resistance is because it often gives you a clue of future direction. We not only do this with the major indexes but we do it with all of our trades.
As long as the picture or story hasn’t change, then it makes it easier to stick to your game plan. We warned last week that we could get a “dead-cat bounce” or a “relief rally” because the sentiment had become a little too negative although well deserved.
We still feel like any rallies should be sold and the upcoming earnings season will likely set the stage for the market’s next move. We are hoping to break out of this recent range and we could care less which way the market is headed but we are preparing for another leg lower.
Here is at look at some of the big names set to report second-quarter earnings this week:
Alcoa (AA, $10.94, up $0.22) after the close on Monday and Intel (INTC, $20.24, up $0.14) on Tuesday. Thursday we get a look at Google (GOOG, $467.49, up $10.93) and JPMorgan Chase (JPM, $38.85, up $0.69) while Friday brings Bank of America (BAC, $15.11, up $0.25) and General Electric’s (GE, $14.95, up $0.12) numbers.
As far as pre-announcements, we thought we might see more as only 150 companies gave Wall Street a heads-up on the upcoming quarter. The S&P 500 had a little over a 100 of the names which means roughly 20% gave guidance updates. To put things in perspective, there were twice as many 10 years ago.
The underperformance in a few sectors have caused analysts to lower estimates going into the quarter and some companies will look golden when they report. The key will be what wording they use going forward.
We are looking for another volatile week and the bulls have a little momentum they are using to push the market higher. We think the bears will also show up as we don’t think things will be as one-sided as they have been over the past two weeks. Either way, the rest of the summer will be interesting and don’t forget the July options expire THIS Friday.
We are currently looking at new trades that span August, September and maybe even December call and put options. We are likely to pull the trigger on a few recommendations this week so stay locked and loaded as the wave of news begins to flood Wall Street.
Tags: call options, how to trade options, momentum options trading, Momentum stocks, option picks, option stock picks, options alerts, options newsletter, options track record, put options, stock options trading, volatile options
Posted in Company Commentary, Earnings, Market Analysis, Market Commentary, Oil, VIX, Watch Lists | Comments Off
Monday, July 5th, 2010
7:15pm (EST)
The bears continue to build momentum and used a number of negative headlines to punish the bulls for the second consecutive week. It was a clean sweep on all three of the major indexes as the bears won each round daily with some days more impressive than others.
The week started off slow as Monday was a toss-up but Tuesday was nasty for the bulls after the consumer confidence number revealed the index tanked to 52.9 in June from the prior month’s reading of 62.7. That was enough to push the Dow down 3% and below 10,000 for the first time since early June but the bleeding didn’t stop there. The Nasdaq fell 3.9% while the S&P fell over 3%.
Wednesday was the close of the quarter and the major indexes responded by giving back another 1%, while Thursday and Friday ended with losses being contained to less than 0.5%, on average.
Wall Street was expecting fireworks early, either way, as all eyes were on Friday’s jobs data. The news was once again disappointing but the bulls had to be happy that they weren’t steamrolled after hearing payrolls declined by 125,000 last month. The private sector added just over 80,000 jobs but every cloud has a silver lining. The fact the unemployment rate unexpectedly improved to 9.5% from 9.7% may have saved the bulls from a bloodbath.
As a result, the Dow ended the week at 9,686, down 457 points, or 4.5%. We mentioned in our last Weekly Wrap that we were watching the 9,800 level when the Dow stood at 10,143 and the index hit our target and then some. We are now expecting a test of 9,500 and any rallies back towards 10,000 should fade. The index has lost over 7% in the past few weeks…
The S&P 500 finished Friday at 1,022, a decline of 54 points for the week, or 5%. We had circled 1,050 as the breaking point and that level failed to hold as well. While we expect a test to 975, the bulls could try to force 1,040-1,050 on the bears which should become resistance going forward. The S&P is down 8.5% over the past 10 trading sessions.
The Nasdaq remains the weakest link as it tanked over 130 points last week, or nearly 6% to finish at 2,091. There was serious damage done at the 2,240 level which represented the 200-day moving average and we mentioned when it fell that the index was looking at 2,150. We think there could be a test back towards previous support but if 2,050 fails there will be a rush to the exits. The index is down nearly 10% in a half-month.
The next battle ground will be fought on the earnings turf as 2Q numbers will start to roll in next week. Alcoa (AA, $10.00, down $0.05) always kicks-off the quarter and it’s hard to believe a $10 stock holds these duties but they do. For the record, Alcoa 52-week low is $8.96. JS (just saying).
If there are going to be any surprises, which we think there could be, then this will be the week companies pre-announce. Historically, this has been a negative ratio with the number of companies lowering expectations coming in at 2-to-1.
This pre-announcement trend has improved over the past few years but we aren’t expecting many companies to show their hands early, regardless of how good or bad it may be. Companies have an obligation to their shareholders to warn if they will miss estimates, but they rarely do.
We are expecting volume to dry up again this week and there are very few catalysts the bulls can use to mount a threat. June same-store sales, which Retailers will report on Thursday, and weekly initial jobless claims are due but don’t expect much. The update will provide some insight on consumer spending and employment but we doubt either announcement will be a game-changer.
The upcoming earnings season could provide some good news for the bulls because expectations have been chilled due to the current market environment. The proof will be in the pudding but if some of the bigger Tech names miss a beat or provide cautious guidance then we could see the bottom fall out of this market.
We have been mentioning that a correction of some sorts would be good for the market because the bulls had an incredible, unstoppable ride from the March 2009 bottom. A lot of people called for a correction along the way but market tops can be hard to call which is why we use “ranges”.
Once ranges are broken, a trend develops, which is why we are never bullish or bearish. We try to play the trend. The current trend is still down but there is a possibility of a “dead cat bounce” or a “snap-back rally” this week as both the bulls and bears position themselves ahead of the start of 2Q earnings. Then again, the bears could push the envelope to our next levels of support that we mentioned earlier.
The July options will expire in 10 days with the start of trading on Tuesday and there are a lot of bets that have been made at higher and lower strike prices. If you thought the current volatility was nerve-racking then buckle-up.
We also wanted to inform everyone that we have auto-trading in place and you can find all of the details on the website. We are looking to add other brokerage firms so please be patient. This has been a work-in-process because many of you have asked for it while we have kept it on the backburner. While the demand is there, please realize this is new for us to.
There will be NO ADDITIONAL charge for the service and we hope you enjoy it.
We will be back in the morning with an update on all of current trades and we will have a beefed up Watch List to take advantage of some possible earnings trades. Again, the July options are set to expire the same week as the season kicks off so we could see some incredible opportunities to buy some cheap out-of-the-money call or put options to play with.
Tags: call options, how to trade options, momentum options trading, Momentum stocks, option picks, option stock picks, options alerts, options newsletter, options track record, put options, stock options trading, volatile options
Posted in Trading Psychology, Watch Lists, Weekly Wrap | Comments Off
Monday, June 28th, 2010
9:00am (EST)
Futures are pointing towards a slightly lower open this morning despite members of the Group of 20 nations pledging to cut budget deficits. The debate between spending to stimulate slowly growing economies and opting for austerity to quickly get ballooning deficits under control continued at the G20 meetings that were held over the weekend. There are still some sticky points on what cuts will be made for some countries but things are progressing.
As far as economic news this morning, May personal spending was up 0.2% after being flat in April while personal income was up 0.4% in May versus up 0.5% in April.
Toyota Motor (TM, $70.00, down $0.43) could set a new 52-week low today after news on the company’s latest safety-related recall. Toyota shares are below $70 in pre-market trading after the recall of 17,000 Lexus hybrids. The latest U.S. federal auto-safety documents reported the vehicles spilled fuel during a crash test.
Lexus has not identified a fix to address the problem, but it is working hard to do so, naturally. Until then, dealers will not deliver any new vehicles in their inventory and this is just another negative headline in Toyota’s latest mishap.
Toyota has been on our Watch List off and over the past few months, but we haven’t pulled the trigger on a trade, yet. We are going to do a little more research to find out where shares could land if Toyota starts to make new lows.
As far as earnings this week:
MONDAY – Cal-Maine Foods (CALM, $33.46, up $0.37), Micron Technology (MU, $9.46, down $0.16), Neogen (NEOG, $27.49, up $0.97), Standard Microsystems (SMSC, $23.54, up $0.14) and Tongxin International (TXIC, $5.04, up $0.04).
TUESDAY – Barnes & Noble (BKS, $16.43, up $0.49), CACI International (CACI, $42.62, up $0.25), General Mills (GIS, $37.34, down $0.23), OMNOVA Solutions (OMN, $7.60, up $0.26), Sealy (ZZ, $3.04, up $0.04), Worthington Industries (WOR, $13.17, up $0.13), and Zep (ZEP, $17.14, up $0.16).
WEDNESDAY – Acuity Brands (AYI, $43.99, down $0.05), American Greetings (AM, $20.27, up $0.26), Apollo Group (APOL, $43.75, down $2.22), Christopher & Banks (CBK, $6.86, up $0.24), Global Payments (GPN, $38.65, up $0.50), Investors Real Estate Trust (IRET, $9.20, $0.41), Lindsay (LNN, $35.10, up $0.12), Monsanto (MON, $48.27, down $0.74), Mitel Networks (MITL, $8.99, flat), Schnitzer Steel (SCHN, $43.04, up $0.49), Shaw Communications (SJR, $18.63, down $0.01), Smith & Wesson (SWHC, $4.10, up $0.02), Unifirst (UNF, $41.84, up $0.86) and Xyratex (XRTX, $15.37, up $0.66).
THURSDAY – Constellation Brands (STZ, $16.01, down $0.05), Franklin Covey (FC, $6.71, down $0.07), Methode Electronics (MEI, $9.98, up $0.08), MSC Industrial Direct (MSM, $51.78, up $0.60) and MSCI (MXB, $29.09, up $0.46).
FRIDAY - Vitacost.com (VITC, $9.96, up $0.34) and Volt Information Sciences (VOL, $9.43, up $0.54)
As we head to press, Dow futures are down by 24 points to 10,080 while the Nasdaq 100 futures are off by 2 points to 1,837. The S&P 500 futures are lower by 3 points and were last seen at 1,071.
Tags: momentum options trading, option picks, options alerts, stock options trading, TM, Toyota Motor
Posted in Market Analysis, Market Commentary, Watch Lists | Comments Off
Tuesday, June 8th, 2010
1:10pm (EST)
The market is mixed as the Dow is higher by 44 points to 9,860 while the S&P 500 is up 2 to 1,052. The Nasdaq is lower by 14 points to 2,159.
The Russell 2000 is down 5 points to 612, and has set a new low for the year. We mentioned in our Weekly Wrap that we were watching this index carefully as confirmation money is being taken out of the market.
Offshore drilling contractors got downgraded today by one brokerage firm. Noble (NE, $26.62, down $1.11) and Baker Hughes (BHI, $37.32, down $0.75) were lowered to ”Market Perform” from “Outperform” and Diamond Offshore (DO, $55.89, down $3.32) to “Underperform” from “Market Perform”.
BP (BP, $35.00, down $1.76) and Transocean (RIG, $44.95, down $4.22) are at fresh 52-week lows. BP is getting whacked on bankruptcy rumors while Transocean is getting drilled after reports of another oil leak/ rig failure.
Gold is higher by $7 to $1,249/ ounce.
We are short on commentary today because we have been looking at charts and updating our current trades as they continue to perform well. Subscribers, check the Members Area for the updates. We will be back in the morning with a full update, but if you are not yet a current subscriber then we urge you to give us a try.
We think there are some great trades in our portfolio that could easily see triple-digit returns over the next six weeks.
Tags: BP (BP), momentum options trading, option picks, options alerts, stock options trading, Transocean (RIG)
Posted in Oil, Trading Psychology, Watch Lists | Comments Off
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Friday’s Tidbits; Jailbreak Next Week?
Friday, July 30th, 2010
1:00pm (EST)
We have a lot to talk about today so we are going to throw the kitchen sink at you…
The market is once again choppy as a both the bulls and bears try to gain leverage ahead of the weekend and before Monday’s opening bell. The bears started off strong and had pushed the major indexes down over 1% but the bulls made it back to even and into positive at one point. Trading has been back and forth since.
Economic news is abundant today.
The bears used the latest GDP figure to take the market sharply lower at the open as data showed the economy grew 2.4% in the second quarter versus a forecast of 2.6%.
The bulls used a collection of good news to stage a comeback. The Chicago PMI for July was 62.3 versus expectations of 56.0 while the Consumer Sentiment Survey for July was 67.8 versus the anticipated 67.5 print Wall Street had penciled in.
As a result, the market is mixed as the Dow is down 15 points to 10,452 while the S&P 500 is down 1 point to 1,100. The Nasdaq is up 3 points to 2,254.
Next week is setting up to be an even bigger battle as we have seen the volatility pick up and we have watched the bears stand ground. It’s not to say the bulls won’t break through these hard resistance levels but if Vegas had a line on Monday’s action we would put a $20 on a lower Monday.
Earnings will be another key element in next week’s direction as well as economic news but we could see some explosive moves before today’s closing bell as mutual funds dress up the month and traders square up the books for July.
Our Watch List is PACKED with potential bearish and bullish trades and we have even profiled some LEAP options out until 2012 that we eyeballing. This weekend we will also be taking a closer look at Best Buy (BBY, $34.57, up $0.02) and Chesapeake Energy (CHK, $20.94, down $0.16), two beaten down stocks that look “interesting” at these levels. We also take a look at Gold and what is happening with it. We are expanding our Weekly Wrap to provide you more coverage of the market and a few stocks here and there.
We are also pleased to announce we have HARD copies of our trading manuals How to Trade Options on Momentum Stocks and Watch List Overview. This option course has been two years in the making and we are excited to show you how you too can find triple-digit return trades and set up Watch Lists to follow hundreds of stocks at once.
We are going to show you how we look at trades, how to figure out the returns on where a stock needs to be and how to read a few charts. And much more golden nuggets.
We will update all of this on Sunday in our Weekly Wrap so look for details over the weekend. Next week will be nail-biting and we will set you up on what to watch for. We have also updated our current trades including the one from this morning in our Members Area so make sure you check the latest up-to-the-minute updates.
Until then, have a good weekend!
Tags: BBY, Best Buy, call options, CHK, Gold, Gold stocks, how to trade options, momentum options trading, Momentum stocks, option picks, option stock picks, options alerts, options newsletter, options track record, put options, stock options trading, volatile options
Posted in Company Commentary, Trading Psychology, Trading Tips, Watch Lists, Weekly Wrap | Comments Off