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Monday, March 5th, 2012
1:25pm (EST)
The market has gotten off to a slow start as futures were weak throughout the night. We spent a lot of time looking at the charts over the weekend and the 5-week trading range we have been in has been frustrating to a degree. While we continue to take profits when we can, it’s been harder to establish a clear trend as the indexes continue to churn sideways. We mentioned this morning and in last night’s Weekly Wrap that the Russell 2000 (800.10, down 2.32 points) was breaking down like a rented mule and needed to hold 800 but there are some other sectors showing weakness which has lead to today’s decline.
Economic news has come in better-than-expected but China lowered its GDP (Gross Domestic Product) figures which offset the good news here at home. The February ISM non-manufacturing index came in at 57.3, versus expectations for a print of 56, while Factory Orders showed a decrease of 1.0% in January, versus expectations for a 1.5% decline.
Meanwhile, China lowered its GDP target to 7.5% from 8% which has been a goal for them since 2005. This was one of the key reasons the overseas markets were weak when they opened. China said that it needs to shift to a more sustainable and efficient economic model which could cut its reliance on exports and capital spending in favor of increased consumption. The news wasn’t all that bad as many analysts expected them to lower their GDP to 7% or less.
The two big events this week is the expected announcement of Apple’s (AAPL, $535.76, down $9.42) iPad 3 and Friday’s unemployment numbers. The headlines that come from the news will surely sway the markets and it may or may not be enough to break us out of this trading range but we are betting it will.
Given the lack of positive catalysts today, the bulls have struggled to gain momentum as the bears have held any advance in check. The Dow is down 46 points to 12,931 while the S&P is lower by 8 points to 1,361. The Nasdaq is off 28 points to 2,948.
Some good news for our portfolio – Our magicJack VocalTec (CALL, $23.26, up $1.28) call options continue to shine. The trade is now up 179% and we are looking for shares to make a move north of $25 this week. If not, our hard Stop will protect profits. Subscribers, check the Members Area for the updates and we will see the rest of yawl in the morning.
Tags: AAPL, Apple put options, CALL, call options, iPad3, magicJack
Posted in Apple, Economic News, Market Analysis, Market Commentary | Comments Off
Friday, February 24th, 2012
9:00am (EST)
Well, the bulls finally showed up to the playground on Thursday as they ran past the bears after a close first half. We had a feeling coming into the week that Apple’s (AAPL, $516.39, up $3.35) shareholder meeting would put Wall Street in a good mood and they did for the most part.
There was no stock-split or dividend announcement, but today is Steve Jobs’ birthday, so it would be nice to see them honor him and the shareholders in some way on what would have been his 57th.
Apple admitted that the $100 billion it has in its coffers is more than enough to keep the company running at top notch and they were close to making a decision on a dividend.
As far as the market, the action was flat to start the session and the major averages quickly moved lower as it looked like another retest to short-term support. It was and the bulls once again bought the dip and were back in control by lunchtime.
The Dow added 46 points, or 0.4%, to finish at 12,985. The blue-chips kissed a high of 12,996 and it would be nice to see a close above 13K going into the weekend. The low came in at 12,882 as support has been strong at 12,800 all week.
The S&P gained a six-pack, or 0.4%, to close at 1,363 after reaching a peak of 1,364.24. The index traded down to 1,352 and 1,350 stuck like glue.
Meanwhile, the Nasdaq popped 24 points higher, or 0.8%, to settle at 2,957. Tech went out near its highs and will try to take out Tuesday’s 52-week high of 2,965 before the closing bell. As of now, the index is higher by 5 points for the week and we would love to see at least a hold today at current levels.
We are still respecting the downside by taking smaller positions than normal but we mentioned in our Weekly Wrap there might not be a serious pullback until mid-March. We did say the market would sputter in February and it has to some degree but the dip is being bought more aggressively than we thought.
Futures are showing a solid open and we have added some new trades today on our Watch List. We don’t normally like to open new positions on a Friday but there is a NEW TRADE we are also trying to get into at the open. Subscribers, check the Members Area for the details.
Tags: AAPL, AAPL dividend, Apple dividend, Apple stock split
Posted in Apple, Hot Stocks, Market Analysis | Comments Off
Friday, February 17th, 2012
9:00am (EST)
The bears tested near-term support on Wednesday but the bulls came right back on Thursday to push near-term resistance and then some following a 1+% pop across the board for the major indexes.
We mentioned yesterday’s slew of good economic reports and Greece was an afterthought for a session. Moody’s (MCO, $38.45, up $0.21) tried to ruin the bulls party before it even started after saying they might downgrade their ratings on the Big Banks by 2 or 3 notches, including JP Morgan Chase (JPM, $38.00, up $0.60), Morgan Stanley (MS, $19.19, up $0.23) and Bank of America (BAC, $8.09, up $0.31).
Once again, Moody’s was right on cue, huh?
The Dow advanced 123 points, or 1%, to finish at 12,904. The blue-chips fell just short of their 52-week high of 12,924 set last week after trading to 12,914 intraday. The index is now less than triple-digits from our Dow 13,000 fluff target. Double-top or breakout?
From our November 13th, 2011 Weekly Wrap:
“The blue-chips traded to a high of 12,179 before reclaiming the 12,000 level and its 200-day moving average. We mentioned all week the 11,800 (blue line, black circles) level would be crucial in holding with 11,600 providing backup. After testing and holding this area on Wednesday, we told you to stay long and strong. We didn’t think the Dow would clear 12,200 (orange line, green circles) on Friday given the resistance but if it is taken out on the close this week, look for a test up to 12,600-12,800 (black line, purple circles) over the next month or so.” (END)
The S&P added 15 points, or 1.1%, to settle at 1,358. We have been talking about the importance of a close above 1,350 which has been our near-term target since November and said 1,375 would come into play if the index could close above this level for a few days. We got that on Friday and Monday and convincingly yesterday.
From our November 13th, 2011 Weekly Wrap:
“We said coming into the week there could be a test down to 1,225 and on Wednesday the low was 1,226. The trend would change on a break below the 1,200 (green line, black circles) level but we expect a run past 1,275 (blue line, orange circles) and a hold of the 200-day MA this week. If cleared and the bulls can hold, then the momentum could carry the S&P up to 1,300-1,350 (purple line, black circles).” (END)
The Nasdaq soared 44 points, or 1.5%, to end at 2,959. Tech traded up to 2,961 and is a little over 1% from reaching our fluff target of 3,000. The bulls have done a tremendous job over the last 3 weeks holding 2,800-2,850 once we cleared this level and the 15-year chart we showed you back in January has been money.
From our November 13th, 2011 Weekly Wrap:
“Tech traded down to 2,601 on Thursday but was able to hold the 2,600 level (green line, orange circles). There is further risk down to 2,550 if this level is back tested but the bulls will try to push 2,700-2,750 (purple line, black circles) again this week. The one stock that needs to participate in the Nasdaq’s rally to 2,900 (blue line, brown circle) will be Apple (AAPL, $384.62, down $0.60) but that’s another story.” (END)
We gave our fluff targets in December which we covered the other day and our longer-term view of the market for 2012 a couple of weeks ago. And yes, Apple was at $385 before Thanksgiving.
We keep reminders of what we say all the time on our office whiteboard which is filled with trading notes and cool colors to remind ourselves of our trading plan. Sometimes we can be wrong but we told you in September if the market could break out of its 2-month trading range, the run to the top could be jaw-dropping.
The bulls have the lead for the week as the Dow is up 103 points while the S&P 500 is showing a gain of 15 points. The Nasdaq is higher by 56 points.
Futures are up as we head to press. Subscribers, check the Members Area for the hot updates.
Tags: AAPL, Apple stock quote, Dow
Posted in Market Analysis, Market Commentary | Comments Off
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
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Bears Grab Early Lead
Monday, March 5th, 2012
1:25pm (EST)
The market has gotten off to a slow start as futures were weak throughout the night. We spent a lot of time looking at the charts over the weekend and the 5-week trading range we have been in has been frustrating to a degree. While we continue to take profits when we can, it’s been harder to establish a clear trend as the indexes continue to churn sideways. We mentioned this morning and in last night’s Weekly Wrap that the Russell 2000 (800.10, down 2.32 points) was breaking down like a rented mule and needed to hold 800 but there are some other sectors showing weakness which has lead to today’s decline.
Economic news has come in better-than-expected but China lowered its GDP (Gross Domestic Product) figures which offset the good news here at home. The February ISM non-manufacturing index came in at 57.3, versus expectations for a print of 56, while Factory Orders showed a decrease of 1.0% in January, versus expectations for a 1.5% decline.
Meanwhile, China lowered its GDP target to 7.5% from 8% which has been a goal for them since 2005. This was one of the key reasons the overseas markets were weak when they opened. China said that it needs to shift to a more sustainable and efficient economic model which could cut its reliance on exports and capital spending in favor of increased consumption. The news wasn’t all that bad as many analysts expected them to lower their GDP to 7% or less.
The two big events this week is the expected announcement of Apple’s (AAPL, $535.76, down $9.42) iPad 3 and Friday’s unemployment numbers. The headlines that come from the news will surely sway the markets and it may or may not be enough to break us out of this trading range but we are betting it will.
Given the lack of positive catalysts today, the bulls have struggled to gain momentum as the bears have held any advance in check. The Dow is down 46 points to 12,931 while the S&P is lower by 8 points to 1,361. The Nasdaq is off 28 points to 2,948.
Some good news for our portfolio – Our magicJack VocalTec (CALL, $23.26, up $1.28) call options continue to shine. The trade is now up 179% and we are looking for shares to make a move north of $25 this week. If not, our hard Stop will protect profits. Subscribers, check the Members Area for the updates and we will see the rest of yawl in the morning.
Tags: AAPL, Apple put options, CALL, call options, iPad3, magicJack
Posted in Apple, Economic News, Market Analysis, Market Commentary | Comments Off