1:30pm (EST)
“Momma’s got a squeezebox she wears on her chest and when Daddy comes home he never gets no rest”…
“Come on and squeeze me…”
This song by The Who has to sum up how the bears are feeling today.
The bulls have been singing all morning after the Dow rushed out to a 150 point gain and reached a high of 10,516. However, the bears clawed their way back and actually took the Dow lower to 10,311. Folks, that is a 200-point swing and we are only at halftime. Currently we are at 10,385, up 19. The S&P is holding 1,104.
We still have a target of 10,800 for the Dow but remember the market always looks forward and can turn on a dime. Having said that, while we continue to be bullish, January could get ugly if and when volatility gets insane…and it will.
Folks, it’s been a busy day and a busy week but we thought we would spend a little time talking about our service today instead of the market.
We know some of you are new and some of you have just been with us for 90 days or less. Well, the past few weeks have been rough and some of you may not have gotten the results you have been hoping for with our service.
The first thing to remember is that options are all about momentum which is where we came up with our name. For those subscribers that have been with us for months and since our inception (18 months) know that we have been pretty dead on with our market analysis. We were right when we called for the crash in late 2008 and we were right when we called for a rebound from the March lows. Check out our 2008 and 2009 portfolios and really analyze it. Take a look at the option positions we started in March 2009. We weren’t sure of a market bottom but we were acting as if it was by going 2 or 3 months out on our call option picks. They returned our subscribers some incredible profits.
Just recently we have been calling for Dow 10,800 and back in August and September we said the market would still rally. But what happened last Friday was an EVENT that can happen to all good option traders. We were stopped out of 4 of our trades when the market tanked on the Dubai news. By Tuesday of this week we told you Wall Street has put that in its rearview mirror.
The point is we had stops in place and nobody knew last Friday just how bad the Dubai news was. The picture brightened, unemployment came down and the market is rallying.
One of the trades we were stopped out of was Microsoft (MSFT, $30.06, up $0.23). We were in the December calls (MSQLF, $0.55, up $0.07) for 65 cents and we showing a profit but the stock kept having trouble at $30. However, we said once this level broke the call options could do well. Well, they hit a high of 87 cents this morning as the stock traded to a high of $30.37 this morning. This would have represented a 34% gain but instead we show a 54% loss for the portfolio as we were stopped out.
The point is, we are incredibly accurate with market direction and you buy call options in a bull market and put options in a bear market. Of course, it’s a little harder than that but you get the general idea. The fact that last Friday took us out of some great trades didn’t let it affect our mental toughness. We are still trading.
There is also the fact that some subscribers take some trades but not ALL of them. So, one subscriber could be selective and have all losing trades which would lead them to believe we don’t know what the heck we are talking about and want to cancel their service. Another subscriber might be selective and have all winners and think we are the best thing since two-piece bikinis.
Folks, we will have losing trades. And we are not ashamed to admit them. But, if we show in our track record and one trade was a 100% winner and one was a 100% loser in the same week you would think we lost money. Well, that would not be the case.
If we did a full position on one trade and invested $2,000 on 10 contracts and a half of a position (5 contracts) on an earnings trade that could go either way, then we still made money. And we explain the trades this way in our Members Area. Earnings trades are all or nothing. They can make you over 400% like our Priceline.com (PCLN, $220.24, up $0.23) did or they can lose 97% in a day. However, if you did a full position on Priceline.com like we recommended and a half position on Aerospostale (ARO, $29.05, up $0.10) then you felt little impact on your portfolio. If you did the trades in reverse, then your results could be worse.
FedEx (FDX, $87.21, up $1.27) is pushing $90 and we were in a trade that got stopped out as well. FedEx still looks strong but got weak just for a minute which put us on the sidelines.
Also, some subscribers have asked for a cell phone alert service.
The easiest way to keep in touch with us is this way and it will ensure that you get our email updates as soon as they are released.
First, go out and buy a smart-phone or if you have one make sure our emails are coming through.
When we send out an email you should get it in a few seconds. Once we send out an email our phone makes a “ding” sound and it lets me know I have an email. (We copy ourselves on all emails we send out and it works every time).
Then, if there is action you need to take or want to take you can make the trade right from your phone. We have all of our brokerage accounts loaded on the phone as most of them have apps.
We understand that people work and can’t watch the market which is why we try to have select times at which we do the trade updates…9am and 1pm. Today’s is late because we are doing a long update…
The update by 9am gets you prepared for the market and the 1pm update keeps you caught up. Now, if we do an update outside of those time frames OR we do the 1pm update a little early or a little late then you can rely on your email to keep updated.
The trading manual…
It will be $2,495 and a one-year membership is included. The manual will teach you how to really look for option trades and will give you a better insight to how we break down our trades. This is a one-time special offer because all of you are our charter members. Remember, we are limiting our circle of subscribers so that our trades don’t get crowded. Once we reach our limit, the trading manual will be $2,495 with NO free one-year membership. If you already have a membership, this will be added to your current membership.
The last thing we want to say is this. We get more joy in teaching people how to trade options than actually trading. Yes, we still trade and yes, we like money and yes, we trade our own accounts. But when you write us and tell us your success stories then we know we have a happy subscriber.
Look. We wanted to create this service to teach people how to trade options and find trades. The picks we provide are a bonus and we realize there are subscribers who want us to do the work which is cool. If we make them money maybe they will tell their friends about us. The bottom line is that we want you to make money and we don’t want you to be afraid of options or some of the “transgressions” you may have. (Insert Tiger Woods joke here…)
We have updated all of our current trades before we head out for the weekend and we will be back Sunday night with the Weekly Wrap…
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Market Flat After EU Bank Test Results
Friday, July 23rd, 2010
1:20pm (EST)
The market is near the breakeven line after Europe’s bank stress results were revealed a little while ago. There are lots of moving parts and Wall Street is still digesting the news but the headline is that 7 out of the 91 banks failed the stress test. The European Union say the results show the “resilience” of their banking system and we will bring you more of this story in our Weekly Wrap.
Corporate news is also hitting the wire with another mixed bag of earnings.
Microsoft (MSFT, $25.34, down $0.50) is trading lower despite reporting better-than-expected earnings on the top and bottom lines. The company said profits came in a at $4.5 billion, or $0.51 a share, versus $3 billion, or $0.34 a share, in the same quarter last year. Revenue came in at $16 billion for the quarter last year. Analysts were looking for earnings of $0.46 a share on sales of $15.3 billion.
SanDisk (SNDK, $40.10, down $3.00) is also lower but not because of its numbers. The company, which is a big player in the flash memory market, reported earnings of $258 million, or $1.08 a share, up from $53 million, or $0.23 a share, in the year ago period. Revenue shot up to $1.2 billion from $731 million a year earlier. Analysts were looking for $0.90 a share on sales of $1.16 billion. The company also announced its CEO is leaving them after 22 years of service.
As we head to press, the Dow is higher by 11 points to 10,333. The S&P 500 is off by a point and is at 1,092 while the Nasdaq is down 7 points to 2,239. Once again, the S&P 500 cannot clear 1,100 while the Nasdaq is having trouble at 2,250.
We will be back Sunday night with our Weekly Wrap and an in-depth look at what the EU bank stress tests mean for the market. Our trades are holding up well and we will be looking to add new positions on Monday.
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, Yahoo / Microsoft | Comments Off