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Monday, April 16th, 2012
1:30pm (EST)
The market is mixed as we head into the second half of trading as the blue-chips are up while both the S&P 500 and Tech are trending lower. Futures were pointing towards a nice pop at the open but the Nasdaq has been weak for much of the session after a positive open. Apple (AAPL, $587.49, down $17.74) and Google (GOOG, $606.29, down $18.31) were leading the Tech sector lower, as both try to hold down the $600 level.
As far as economic news, Retail Sales rose 0.8% in the month of March. Excluding autos and gasoline, the core reading was up 0.7%, versus forecasts for an increase of 0.5%. The Empire Manufacturing Index came in at 6.56, which was well below expectations for a print of 18 while the Housing Market Index for April came in at 25, versus expectations for a reading of 29. And finally, Business inventories were up 0.6% in February, matching expectations.
Citigroup (C, $34.07, up $0.66) is up 2% after reporting better-than-expected earnings but missing on sales. The company reported a profit of $1.11 a share on revenue of $19.4 billion. Wall Street was expecting $1 a share on revenue of $19.8 billion.
As we head to press, the Dow is up 90 points to 12,939 while the S&P is up less than a point to 1,370. The Nasdaq is down 21 points to 2,990.
One of our current trades was stopped out today. Lululemon Athletica (LULU, $73.02, down $0.49) traded higher at the open and our Hard Stop was triggered. We made a nice 25% return in under 2 weeks and we may be back to play this name again, soon. Subscribers, check the Members Area for the updates.
Tags: AAPL, C earnings, GOOG
Posted in Apple, Economic News, Google | Comments Off
Wednesday, March 28th, 2012
9:00am (EST)
“Although this week is historically bearish, we could see some “window-dressing” by the fund managers which means they will be buying stocks early in the week. We still feel the market is close to peaking but we wouldn’t be surprised to see one last run at our near-term targets (Dow 13,500; S&P 1,425-1,450; Nasdaq 3,250; Russell 850) if there is a rush to buy this week.
We could also see a trading range this week before we get the surge in April which is typically one of the best months of the year for the market. Over the past decade, the indexes have gained 2%, on average, in April and if support holds this week, there is a good chance history repeats itself. However, we aren’t too bullish on 1Q earnings which will start to come in during the second week of April.” (3/25 Weekly Wrap and Monday morning outlook)
So far the market is following our road map for the week following Monday’s big surge. There was a little follow through on Tuesday as some of the large-cap stocks like International Business Machines (IBM, $207.18, down $0.59), Home Depot (HD, $50.04, down $0.09), Walt Disney (DIS, $44.15, down $0.23) hit new 52-week highs before pulling back as the follow through rally fizzled late in the day.
The Dow gained 44 points, or 0.3%, to close at 13,197. The blue-chips traded to a high of 13,265 but closed below the 13,200 level which is becoming the new favorite playground for the bulls and bears this week. Dow component, Pfizer (PFE, $22.50, up $0.34) managed to hit a new 52-week high of $22.80 but it wasn’t enough to keep the index out of the red.
The S&P 500 slipped 4 points, or 0.3%, to end at 1,412. The index traded to a high of 1,419 at the open, its loftiest level since May 2008, and fell just short of kissing our near-term target of 1,425.
The Nasdaq dipped 2 points, or 0.1% to settle at 3,120. Tech traded to a high of 3,134 late in the day but went out near its low by the closing bell. Apple (AAPL, $614.48, up $7.50) tried to keep the index in the green and did its part after setting a fresh all-time high of $616- and change. The Apple March 610 calls (AAPL120330C00610000, $7.75, up $2.65) opened at $4.65 before adding 50% for the day. It’s been years since we have played options on Apple but now that the stock trades WEEKLY options, we have found a cheaper way to play the stock.
Futures are favoring the bears this morning as we head to press and look like this: Dow (+35); S&P 500 (+4); Nasdaq (+8). Subscribers, check the Members Area for the updates as we have moved a couple of Hard Stops up to protect profits.
Tags: AAPL, hard stop, IBM, option hard stop, Walt Disney stock
Posted in Hot Stocks, Market Analysis, Sectors | Comments Off
Tuesday, March 20th, 2012
9:00am (EST)
The bulls got off to a good start for the week following Friday’s flat action and put up some good numbers yesterday. Much of the advance was thanks in part to Apple’s (AAPL, $601.10, up $15.53) dividend announcement but the Financial stocks did well again and continue to set new 52-week highs.
The Dow gained 6 points to end at 13,239 after trading to a high of 13,269 and testing a low of 13,208. The S&P 500 also added a half-dozen points to close at 1,410 after kissing a high of 1,414. The index traded down to 1,402 at the open but held 1,400. The Nasdaq was strong from start to finish as Tech jumped 23 points, or 0.75%, to settle at 3,078. Side Note: The Russell 2000 added over 7 points to finish at 837.77 but more importantly, the index finally broke above resistance which we talked about in our Weekly Wrap and yesterday morning.
American Express (AXP, $57.27, up $0.72) added another 1% and reached a fresh 52-week high of $57.50 on Monday. We said last week shares were headed to $60 when we recommended a call option trade to our subscribers. It is now up 438% in under a week.
Capital One (COF, $55.10, up $0.60) came within spitting distance of breaking its 52-week high of $56.26 set last May after closing at double-nickels and peaking at $56.19. We also have a near-term target of $60 for shares and subscribers are now up over 300% on our Capital One call option trade since last Tuesday.
Bank of America (BAC, $9.53, down $0.27) broke double-digits but didn’t set a new 52-week high. Shares did, however, trade to a high of $10.10 before the talking heads ruined it as they finished the session down 3%. The 52-week high is at $14.05 for BAC but we have been recommending the stock since it was at $5 back in December for our Weekly Wrap.
We were watching Apple’s WEEKLY options yesterday and we wanted to pull the trigger on the March 600 calls (AAPL120323C00600000, $10.75, up $2.60) but they opened at $12.20 and we were looking to send out a Trade Alert to buy them for under $10. The calls traded to a high of $14.40 but the premiums at the open were already built-in after the dividend announcement.
The calls did trade down to $6.95 but we didn’t want to get whipsawed because shares are in uncharted blue-sky territory. It is still an expensive trade and one we don’t often do but we are looking at ways to play Apple because they aren’t splitting the stock anytime soon. However, we won’t be trading 10 or 20 contracts because we would be risking a half or third of the profits we have already banked for the year. A 10 contract trade on an option priced at $10 will set you back $10,000 and 1 contract would cost $1,000.
This is another reason why we don’t typically trade options on stocks over $100 because it is so much easier to take smaller risks than to try and day trade Apple. We would rather buy 30 or 40 contracts on a 40 or 60 cent option or 10 or 20 contracts on options under $2.
Sure, if Apple goes to $650 by Friday, those March 600 Weekly call options will be worth $50 for nearly a 400% gain but if shares retreat and fall back below $600 and you aren’t out of the position, you will lose 100% of your investment. It is also easier to make 400% on a 40 cent option on a stock that moves from $53 to $57 which is what we have done with our American Express (AXP, $57.27, up $0.72) call option trade in just under a week.
This should help answer any questions on why we don’t trade Apple but we have been giving you powerful hints for those of you that want to play at the high-limit tables.
As we head to press, futures are showing a lower open and look like this: Dow (-63); S&P 500 (-8), Nasdaq 100 (-12).
Subscribers, check the Members Area for the updates as we have moved up the Hard Stops to lock-in gains on these two massive trades.
Tags: AAPL, Apple Weekly options, AXP, call options, COF
Posted in Apple, Financial Stocks, Market Analysis, Market Commentary | Comments Off
Thursday, March 8th, 2012
9:00am (EST)
The market rebounded on Wednesday following an upbeat day on news that Greece would meet today’s deadline for its bond debt-swap while Apple (AAPL, $530.69, up $0.43) garnered much of the attention here at home. Although trading was choppy for the first hour, the bulls maintained a steady stream of momentum throughout the day as the indexes reached new highs in the last hour of trading. The bears made a brief showing at the open and worked on the Dow but they had little reason to stay once prior support levels were cleared.
The Dow added 78 points, or 0.6%, to close at 12,837. The blue-chips tested the 12,800 level at the start but the bears were able to draw blood after pushing a low of 12,751. It was only a scratch though as it represented an 8-point loss at the time. The bulls made it up to 12,857 and we would like to see 12,900 cleared today on the close. A move under 12,750 brings 12,600 back into play.
The S&P 500 gained 9 points, or 0.7%, to settle at 1,352. The index held green all day and pushed a high of 1,355. It was sweet to see the bulls retake the 1,350 level and a close above 1,365 would be bullish today. If the 1,340 level fails then the index is destined to test 1,325-1,300.
The Nasdaq jumped 25 points, or 0.9% to finish at 2,935. Tech made a strong showing despite Apple losing its steam and reached a peak of 2,940. We were happy to see 2,925 cleared shortly after the open and the 2,900 level hold. A drop below this area spells trouble.
The Russell 2000 popped over 1% after advancing 9 points to close at 795. The index fell just short of reclaiming 800 but went out near its high.
Futures are showing a strong open as word spreads that Greece should get its debt bond deal done this afternoon. Dow futures are up 68 points to 12,909 while the S&P futures are higher by 10 points to 1,362. Nasdaq 100 futures are showing a gain of 17 pints to 2,625.
Subscribers, check the Members Area for the updates.
Tags: AAPL, Apple iPad release
Posted in Apple, Market Analysis, Market Commentary | Comments Off
Wednesday, March 7th, 2012
12:45pm (EST)
The European have just closed and finished in the green as optimism grows over a Greek debt deal. The uncertainty knocked the wind of the bulls’ sails on Tuesday as the major indexes fell 1.5%, on average. The bears were able to penetrate key levels of support but not by much. We often mention how the indexes tend to overshoot support and resistance and yesterday’s pullback still had the major indexes above their 50-day moving averages.
The big news here at home will be Apple’s (AAPL, $535.72, up $5.46) update at 1pm (EST) for the expected iPad3. There is talk that the company might keep the iPad2 around, at a discounted price, to compete with Amazon’s (AMZN, $184.77, up $3.68) toy tablet which hasn’t been much of a threat.
Apple already commands a 75+% market share of the tablet industry and its rivals are splitting the pie in 5% slices.
Of course, there is risk today if the hype doesn’t live up to expectations. The key cool features that Appleholics expect are 4G LTE, a better screen and a faster chip. If 4G is included, expect it to be in the iPhone5 which would be super bullish as the move to high quality on the go continues to explode. Apple could also introduce the iTV but we think that rumor is a little premature.
There are rumors of some type of new touch screen technology so the wow factor could be there to drive Apple past $550 today. If there is a disappointment, then shares could test $500.
We would love to trade the options and we have looked at the Weekly options on Apple but we are on the fence. This is not an official recommendation but let’s look at the picture on what could happen based on a 5% move in the stock.
The Apple March 555 calls (AAPL120309C00555000, $1.45, down $0.05) have traded over 3,000 contracts and have a “breakeven” point at $556.45, technically. The Apple March 515 puts (AAPL120309P00515000, $1.24, down $1.10) are down 50% but could get active on a pullback.
Both of these options together would be considered a strangle option trade and the total cost would be $2.70. This would be a $2,700 investment on 10 calls and puts and here is what would need to happen.
If shares of Apple are at $510 or lower by Friday’s close, the trade would be a double. If shares are at $560 or better, the trade would be a 100% winner. If shares stay in between these ranges then the premiums could get whacked and the options could expire worthless.
We will monitor this trade but we will be sitting on the sidelines with some popcorn watching the action. We think Apple has a few surprises up its sleeve so it should be interesting.
As we head to press, the Dow has reclaimed the 12,800 level and is up 75 points to 12,834 while the S&P 500 is higher by 9 points to 1,352. The Nasdaq is showing a gain of 28 points to 2,938. We have updated our current trades before the show so subscribers, check the Members Area for the updates.
Tags: AAPL, AAPL strangle option trade, Apple iPad3
Posted in Apple | Comments Off
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Tech Shines as Nasdaq Advances
Tuesday, March 20th, 2012
9:00am (EST)
The bulls got off to a good start for the week following Friday’s flat action and put up some good numbers yesterday. Much of the advance was thanks in part to Apple’s (AAPL, $601.10, up $15.53) dividend announcement but the Financial stocks did well again and continue to set new 52-week highs.
The Dow gained 6 points to end at 13,239 after trading to a high of 13,269 and testing a low of 13,208. The S&P 500 also added a half-dozen points to close at 1,410 after kissing a high of 1,414. The index traded down to 1,402 at the open but held 1,400. The Nasdaq was strong from start to finish as Tech jumped 23 points, or 0.75%, to settle at 3,078. Side Note: The Russell 2000 added over 7 points to finish at 837.77 but more importantly, the index finally broke above resistance which we talked about in our Weekly Wrap and yesterday morning.
American Express (AXP, $57.27, up $0.72) added another 1% and reached a fresh 52-week high of $57.50 on Monday. We said last week shares were headed to $60 when we recommended a call option trade to our subscribers. It is now up 438% in under a week.
Capital One (COF, $55.10, up $0.60) came within spitting distance of breaking its 52-week high of $56.26 set last May after closing at double-nickels and peaking at $56.19. We also have a near-term target of $60 for shares and subscribers are now up over 300% on our Capital One call option trade since last Tuesday.
Bank of America (BAC, $9.53, down $0.27) broke double-digits but didn’t set a new 52-week high. Shares did, however, trade to a high of $10.10 before the talking heads ruined it as they finished the session down 3%. The 52-week high is at $14.05 for BAC but we have been recommending the stock since it was at $5 back in December for our Weekly Wrap.
We were watching Apple’s WEEKLY options yesterday and we wanted to pull the trigger on the March 600 calls (AAPL120323C00600000, $10.75, up $2.60) but they opened at $12.20 and we were looking to send out a Trade Alert to buy them for under $10. The calls traded to a high of $14.40 but the premiums at the open were already built-in after the dividend announcement.
The calls did trade down to $6.95 but we didn’t want to get whipsawed because shares are in uncharted blue-sky territory. It is still an expensive trade and one we don’t often do but we are looking at ways to play Apple because they aren’t splitting the stock anytime soon. However, we won’t be trading 10 or 20 contracts because we would be risking a half or third of the profits we have already banked for the year. A 10 contract trade on an option priced at $10 will set you back $10,000 and 1 contract would cost $1,000.
This is another reason why we don’t typically trade options on stocks over $100 because it is so much easier to take smaller risks than to try and day trade Apple. We would rather buy 30 or 40 contracts on a 40 or 60 cent option or 10 or 20 contracts on options under $2.
Sure, if Apple goes to $650 by Friday, those March 600 Weekly call options will be worth $50 for nearly a 400% gain but if shares retreat and fall back below $600 and you aren’t out of the position, you will lose 100% of your investment. It is also easier to make 400% on a 40 cent option on a stock that moves from $53 to $57 which is what we have done with our American Express (AXP, $57.27, up $0.72) call option trade in just under a week.
This should help answer any questions on why we don’t trade Apple but we have been giving you powerful hints for those of you that want to play at the high-limit tables.
As we head to press, futures are showing a lower open and look like this: Dow (-63); S&P 500 (-8), Nasdaq 100 (-12).
Subscribers, check the Members Area for the updates as we have moved up the Hard Stops to lock-in gains on these two massive trades.
Tags: AAPL, Apple Weekly options, AXP, call options, COF
Posted in Apple, Financial Stocks, Market Analysis, Market Commentary | Comments Off