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Wednesday, February 1st, 2012
9:00am (EST)
After an initial pop at the open, the market matched Monday’s action by testing support and spending the rest of Tuesday’s session trying to get back to even. Following a 3-week rally to start the year, a short-term trading range has developed over the past week-and-a-half which could be decided by Friday. Economic news, and earnings, could help or hinder both the bears and bulls as we continue to wait patiently for a breakout or breakdown.
The Dow declined 21 points, or 0.2%, to close at 12,632. The blue-chips reached a high of 12,720 at the open but also fell to a low 12,567 on the weaker-than-expected economic news.
The S&P 500 slipped a point, or 0.1%, to settle at 1,312. The index traded up to 1,321 within the first 30 minutes of action but had dropped to 1,306 by lunchtime.
The Nasdaq edged higher by 2 points, or 0.1%, to end at 2,814. Tech reached a peak of 2,826 at the start of trading but slipped to a low of 2,798 intraday.
Amazon.com (AMZN, $194.44, up $2.29) announced their numbers after the close last night, but unlike Apple (AAPL, $456.26, up $3.25), they failed to crush Wall Street’s estimates and actually came up a little short.
The company posted a profit of $177 million, or 38 cents a share, on revenue of $17.4 billion. The suit-and-ties were looking for 17 cents a share on sales of $18.25 billion.
Looking ahead, Amazon also came in a little light on their forecast for the current quarter after predicting revenues in a range of $12-$13.4 billion versus expectations for $13.4 billion.
Shares were whacked in after-hours trading last night after dropping $17 to $177, or down 9%. This morning, in pre-market action, shares are at $175, down $19.
As we head to press, Dow futures are up 81 points to 12,658 while the S&P 500 futures are higher by 8 points to 1,316. The Nasdaq futures are off by 11 points to 2,475.
We have a lot to cover this morning, including some chart work for one of our current trades so let’s get on it. Subscribers, check the Members Area for the updates.
Tags: AAPL, AMZN, AMZN earnings
Posted in Apple, Earnings, Market Analysis, Market Commentary | Comments Off
Wednesday, January 25th, 2012
9:00am (EST)
Oh, baby do you know what that’s worth? ($100 billion)
Oh, Heaven is a place on Earth.
They say in Heaven, love comes first
We’ll make Heaven a place on Earth.
Steve Jobs is certainly smiling from up above and it feels as though he never left us. We thought today’s blast from the past was the perfect song to start our morning as we look ahead to the opening bell…
The market made a nice rebound off yesterday’s lows and remained in a tight range for the rest of the day as Wall Street awaited Apple’s (AAPL, $420.41, down $7.00) quarterly results. Despite the nervousness of an Apple letdown, Tech had a strong day compared to other sectors which helped the major averages hold support as the market ended mixed.
The Dow fell 33 points, or 0.3%, to close at 12,675 while the S&P slipped a point to finish at 1,315. The Nasdaq added 2 points to settle at 2,786 but failed to crack 2,800 but this shouldn’t be an issue today.
As far as Apple’s numbers, needless to say, the suit-and-ties were divided heading into the report as half the analysts seemed to be giddy while the other half said there was a chance for an earnings miss – but none of them seemed sure or wanted to bet the ranch. Shares were halted until 4:50pm (EST) in extended trading last night which was a little unusual and goes to show how the much Wall Street weight the company had on its shoulders.
There were over 125 Apple articles within 3 hours after the close on Yahoo’s (YHOO, $15.69, up $0.01) Finance page yesterday talking about Apple’s mind-boggling results.
The company reported a profit of $13 billion, or $13.87 a share, on revenue of $46 billion. The pencil-pushers were looking for earnings of $10 billion on $39 billion in sales. A quick rundown on the record 3 months: 37 million iPhones sold during the quarter, over 15 million iPads, and 5 million Macs. To put things in perspective, the number of iPhones and iPads sold were over 100% increases from the prior quarter. We didn’t even mention the iPods sold for the quarter and the fact its iTunes store is approaching $2 billion sales. By the end of this year, iTunes alone could be a double-digit billion dollar business!
Apple added another $16 billion to its coffers and now has nearly $100 billion in its war chest. Yes, the company ended the quarter with $97.5 billion in cash and marketable securities on its books. Wow.
Once again, we were hoping for a stock-split of 4-for-1 which would have gotten shares down to $100 or so but Apple hasn’t split its stock since 2005 when it did a 2-for-1 deal.
The options on a $400 stock can be expensive and we looked at the Apple February 370 puts (AAPL120218P00370000, $1.80, up $0.35) and the February 470 calls (AAPL120218C00470000, $1.20, down $0.80) yesterday as a possible strangle option trade after our update which represented a $50 move in the stock. We were calculating a 10% swing either way which would get shares to $380 or $460 based on the price at the time. The 10% move wasn’t enough to get the stock past these strike prices which made us nervous because we want shares to move enough to cover the cost of the trade.
Apple shares were up $30 to $450 in after-hours trading last night once they opened and did hit a high of $470 before chilling. This morning they are at $454, up $34. The puts will take a huge hit while the calls should get a nice pop at the open.
As you can see, the option premiums are rich on triple-digit stocks and you need a massive move in the stock to hopefully make a decent return. We would rather play options on stocks on under $100 where a 5% move would double your money or make you 100+% with the right option.
Apple is one of the few triple-digit stocks we wish we could play options on but the risks outweigh the rewards, especially when selling these types of options. No worries. There are hundreds of other stocks we follow under $100 that trade options and we have no problem letting the big boys trade Apple while we focus on Microsoft (MSFT, $29.34, down $0.39), Aflac (AFL, $49.07, up $1.02) and MGM Resorts (MGM, $13.16, up $0.02).
Our subscribers have banked 125% on Microsoft calls, 127% on Aflac call options, and 131% and 114% on 2 MGM call option trades this month alone. Our Seagate Technology (STX, $19.75, up $0.07) also made 100%. That’s 5 triple-digit call option trade winners on stocks that have moved $1-$3 in the last 3 weeks.
With futures up this morning thanks to Apple, we are hoping our other call option trades get some nice pin action.
Futures are mixed as we head to press and look like this: Dow futures are down 35 points to 12,591 while the S&P futures are off by 3 points to 1,308. The Nasdaq futures are showing a 18 point pop and are at 2,445.
Subscribers, check the Members Area for the updates and stay on your toes for possible Trade Alerts. With the Fed speaking at noon, we could be in for a wild ride today as we near the July and April 2011 market highs.
Tags: AAPL, AAPL earnings, Apple stock options), call options, put options, YHOO
Posted in Apple, Earnings, Market Analysis, Market Commentary | Comments Off
Tuesday, January 24th, 2012
1:00pm (EST)
Futures were weak throughout the night following a collapse in the Greece debt talks and got progressively worse as the European markets opened for trading. The weak open overseas translated into a lower start here at home as the bears try to stop the bulls recent momentum.
The European Union rejected Greece’s bondholders swap for a 4% interest rate on newer bonds in exchange for the current tab which puts the country at risk for a default, again. We have seen this circus before and Greece is only part of the problem as Portugal and Italy are next in-line.
Despite the worries, the market has bounced off its lows after holding short-term support which was prior resistance.
In earnings news, Coach (COH, $68.65, up $4.41) is trading higher after beating Wall Street’s estimates by 3 cents a share. It was the fifth-straight quarter Coach has beat estimates on average by 3 cents and we were looking for an earnings miss.
We talked about the company’s impressive numbers yesterday for 2011 and how they had come in ahead of the suit-and-ties for the last 4 quarters but we were convinced they would come up short, or lower guidance, and we were wrong.
The other earnings trade we wanted to take was EMC (EMC, $24.81, up $1.37) but we didn’t like yesterday’s action in the market and decided to stay on the sidelines. We have looked at the stock as a covered call trade and yesterday we peaked at the February 25 calls (EMC120218C00025000, $0.46, up $0.23), which are up 100%, but didn’t like the idea of having 2 all-or-nothing trades.
We are 13-1 for closed trades for 2012 and we have locked in half profits on a number of other trades so we haven’t taken any new trades this week. We see a number of new option trades we like, but if we learned anything in 2010 and the first half of 2011, it is choppy markets are hard to trade and its best sometimes to wait until we get a clearer picture.
We said Sunday night in our Weekly Wrap that Greece could weigh on the market all week and how the talking heads and pros were saying this was a done deal by Monday. No agreement has been reached, yet, and here it is Tuesday.
The Fed will also take center stage on Wednesday as it prepares to release the latest minutes along with the Rate Decision during Wall Street’s lunch break. There has been talk of more easing, or starting up the money printing press again, but with tax refunds starting to come out, we think the Fed stands pat. Tomorrow will also be a big day for Housing numbers.
The big news after the bell will be Apple (AAPL, $424.12, down $3.29) which will be reporting their quarterly results. The bulls have done of a great job of brushing-off Europe’s woes once again but this week is packed with earnings as 25% of the S&P companies will be confessing. This will be the most important one.
It’s still possible the bulls can push the July and April highs on an Apple beat-and-raise but we are in a win-win situation, either way, as we have continued to play the ride up while locking in profits along the way. At some point we are expecting a pullback but our Hard Stops will lock in our profits. We also have longer dated call options that should be okay, but, if the market does take a dip we will be ready to play the pullback.
As we head to press, the Dow is down 45 points to 12,663 after kissing a low of 12,613 while the S&P 500 is lower by 4 points to 1,312 after kissing 1,306. The Nasdaq is trying to rally the troops as it is showing a gain of 2 points to 2,786.
Our Aflac (AFL, $48.40, up $0.35) call option trade has just hit a 100% return so today hasn’t been too bad despite the Coach snafu. Dendreon (DNDN, $14.11, up $0.90) is on the move again and we are just watching the action. Subscribers, check the Members Area for the updates.
Tags: AAPL, Apple earnings, COH, dndn, EMC
Posted in Apple, Covered Calls, Earnings, Hot Stocks | Comments Off
Monday, January 23rd, 2012
1:10pm (EST)
The bulls got off to a slow start but moved into positive territory shortly after the open as the major indexes tried to extend their year-long gains. However, the bears are taking advantage of the broken down talks between Greece and its private creditors while the European Finance Ministers continue work on a plan to cut down the country’s debt load.
We mentioned in our Weekly Wrap that it is imperative that Greece gets another lifeline as they owe 15 billion Euros come March. If there is no new deal, soon, the country could default which would really cause some volatility on Wall Street and global markets.
Economic news will be light over the next couple of days but the middle and back half will be busy. Corporate earnings will be big on Tuesday with Apple (AAPL, $425.58, up $5.28), Coach (COH, $63.98, down $0.87), EMC (EMC, $23.27, up $0.02), Harley-Davidson (HOG, $41.35, down $0.61), Johnson & Johnson (JNJ, $65.12, down $0.15) and McDonalds (MCD, $100.40, down $1.34) stepping up to the podium.
As we head to press, the Dow is down 41 points to 12,678 while the S&P 500 is off by 3 points to 1,312. The Nasdaq is showing a decline of 10 points to 2,777.
We have more profits to take on 2 current trades so we have to cut it short. One trade is up 80% so we want to lock-in half profits. Subscribers, check the Members Area for the updates and stay on your toes. We are looking at a possible earnings trade which may be released later today.
Tags: AAPL, COH, EMC, HOG, JNJ
Posted in Earnings | Comments Off
Thursday, August 25th, 2011
1:30pm (EST)
We mentioned on Tuesday we could be nearing a bottom for Financial stocks and it seems Warren Buffet got the message. Buffett’s Berkshire Hathaway will invest $5 billion in Bank of America (BAC, $7.63, up $0.64) to shore up the company’s balance sheet and provides a much needed vote of confidence for the sector.
Shares of Bank of America surged on the news and are up 9% but have come down from a high of $8.80 which was hit shortly after the open.
The deal between the two sides involves 50,000 shares (at $100,000 each) of preferred stock that will pay a 6% annual dividend and includes warrants to buy 770 million BofA shares at an exercise price of $7-and change over the next 10 years.
The company can buy back the preferred shares at any time providing it pays Mr. Buffett a 5% premium.
It was a big bet by Uncle Warren, who did a similar deal with Goldman Sachs (GS, $109.13, down $1.18) back in 2008, on a company still dealing with billions of dollars in problem mortgage loans. There have been worries BofA might need to raise outside capital of up to $50 billion to deal with losses and meet new industry capital rules and the company said it didn’t need cash but took the money anyway so some questions are being raised.
We have been mentioning over the past few weeks that BofA has a tangible book value of over $12 a share and we were hoping to buy the stock (or options) once it traded in the $5’s. On Monday, shares hit a low of $6.01 and we thought we would get a chance this week to get in, but as you can see, we really may have put a bottom in some of these names. For those of you who participated in our BofA strangle trade that was on our Watch List, congratulations, you have made money on both sides.
Despite the surprise announcement, the market took a turn for the worse after posting solid gains at the open and testing the next layers of resistance. The selloff comes in response to water-cooler talk that Germany may lose its AAA credit rating which pounded their stock market (DAX: 5,584, down 97 points) into the close. The reaction spread to other foreign exchanges and has affected our major indexes which headed lower on the news.
Although both S&P and Fitch recently reaffirmed their Triple A ratings on Germany, it appears short-sellers and the machines are looking for new opportunities.
We have mentioned resistance levels all week and they have been holding just like we thought they would heading into Friday’s Bernanke update.
After reaching a high of 11,405, the Dow is down 125 points to 11,195 while the S&P is off 16 points to 1,161 after kissing 1,190. We don’t know if there would have been, or still is, enough mustard to get over 1,200 but the bulls will be trying to hold at least 1,150 into the close.
The Nasdaq made a trip higher despite the Apple (AAPL, $371.94, down $4.24) news and reached a peak of 2,482 at the open. We have been targeting the 2,500 level as a make-or-break rally point and Tech is currently at 2,427 – down 40 points, or 1.6%.
We like our positions heading into the Bernanke Watch on Friday so let’s see how it plays out. Subscribers, check the Members Area for the current trade updates.
Tags: AAPL, bac, option alerts, option trading, option trading services, options momentum trading, options on stock, options trading, options trading service, Steve Jobs retiring, stock option trade, trade in options, weekly options trading
Posted in Apple, Market Analysis, Market Commentary | Comments Off
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Amazon.com (AMZN) Reports Mixed Results, Lowers Guidance
Wednesday, February 1st, 2012
9:00am (EST)
After an initial pop at the open, the market matched Monday’s action by testing support and spending the rest of Tuesday’s session trying to get back to even. Following a 3-week rally to start the year, a short-term trading range has developed over the past week-and-a-half which could be decided by Friday. Economic news, and earnings, could help or hinder both the bears and bulls as we continue to wait patiently for a breakout or breakdown.
The Dow declined 21 points, or 0.2%, to close at 12,632. The blue-chips reached a high of 12,720 at the open but also fell to a low 12,567 on the weaker-than-expected economic news.
The S&P 500 slipped a point, or 0.1%, to settle at 1,312. The index traded up to 1,321 within the first 30 minutes of action but had dropped to 1,306 by lunchtime.
The Nasdaq edged higher by 2 points, or 0.1%, to end at 2,814. Tech reached a peak of 2,826 at the start of trading but slipped to a low of 2,798 intraday.
Amazon.com (AMZN, $194.44, up $2.29) announced their numbers after the close last night, but unlike Apple (AAPL, $456.26, up $3.25), they failed to crush Wall Street’s estimates and actually came up a little short.
The company posted a profit of $177 million, or 38 cents a share, on revenue of $17.4 billion. The suit-and-ties were looking for 17 cents a share on sales of $18.25 billion.
Looking ahead, Amazon also came in a little light on their forecast for the current quarter after predicting revenues in a range of $12-$13.4 billion versus expectations for $13.4 billion.
Shares were whacked in after-hours trading last night after dropping $17 to $177, or down 9%. This morning, in pre-market action, shares are at $175, down $19.
As we head to press, Dow futures are up 81 points to 12,658 while the S&P 500 futures are higher by 8 points to 1,316. The Nasdaq futures are off by 11 points to 2,475.
We have a lot to cover this morning, including some chart work for one of our current trades so let’s get on it. Subscribers, check the Members Area for the updates.
Tags: AAPL, AMZN, AMZN earnings
Posted in Apple, Earnings, Market Analysis, Market Commentary | Comments Off