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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
Wednesday, July 20th, 2011
1:05pm (EST)
The bulls got off to a good start this morning after stellar earnings from Apple (AAPL, $387.51, up $10.66) had Wall Street in a buying mood. The company reported another ridiculous 3 months as they blew by estimates for the 13th straight quarter on strong iPad and iPhone sales. And strong computer sales. And strong download sales of its applications. Well, you get the picture.
There is no need to go over their numbers because it seems like monopoly money but we have counted 7 analyst upgrades this morning with many of the knuckleheads raising their price targets above $500.
Our question is where were you yesterday?
If these so called “analysts” believed in Apple and are hiking their price targets by 25%-50%, why didn’t they say so before their earnings announcements?
Anyway, we don’t trade Apple because it’s a high triple-digit stock which usually carries high premiums. We could have looked at the Weekly options yesterday with the stock at $376 but we didn’t like thesetups. With many analysts actually negative on the stock going into the quarter, there was a chance for a 10% move either way which we figured would have put the stock at $410 or $340.
If you were bullish on Apple before the close on Tuesday, you could have bought the Apple WEEKLY July 400 calls (AAPL110722C00400000, $0.95, down $1.15) for under $2 yesterday and sold them into strength this morning when they hit a high of $2.65.
If you were bearish on Apple going into the quarter you could have purchased the Apple WEEKLY July 350 puts (AAPL110722P00350000, $0.05, down $1.45) at $1.50 but you would be down 96% today. Ouch.
As a strangle option trade, you could have bought the July 400 calls and the July 350 puts but you would still be feeling pain.
As you can see, even the WEEKLY options on Apple are super-priced and inflated which makes trading Apple a tough task unless you are SELLING options. We don’t ever recommend selling an option because it leaves you “naked” but we wanted to show you why we usually don’t trade options on stocks over $100.
Apple ended the quarter with $75 billion in cash and now sports a market cap of $360 billion. By comparison, Exxon Mobil (XOM, $83.64, up $0.01), the world’s largest company by MC, has a market cap of $412 billion but Apple is closing the gap.
Despite the bullish news, investors have been selling Apple near $400 as shares have reached a high of $398. However, if we owned the stock, which is a lot different than owning options, then we would just hold on to it.
As we head into the second half of trading, the market is trading slightly lower as it retests prior resistance levels which are now trying to form support. The Dow is down 15 points to 12,573 while the S&P 500 is lower by a point to 1,326. The Nasdaq is off by 13 points to 2,813.
As usual, we have a ton of information to cover with our ongoing trades so let’s get to it. Subscribers, check the Members Area for the updates.
Tags: AAPL, binary options, call options, futures options, high beta stocks, Hot stocks, momentum options, Momentum stocks, option market, option tips, options, options mentoring, options trading, options trading course, stock market options, weekly options, what are options
Posted in Apple, Earnings, Market Analysis, Market Commentary | Comments Off
Wednesday, July 20th, 2011
9:00am (EST)
Raise your hand if you know who or what the “Gang of Six” is.
It’s been a couple of years but the Gang of Six came back to life and helped the bulls push key resistance levels (once again) as the market finished nearly 2% higher on Tuesday.
The bulls already had some solid momentum going before the bell as sweet earnings from America’s best provided a springboard into the opening bell. The Dow surged to a triple-digit pop right off the bat and held those gains into the afternoon which is when the stampede began.
Although we couldn’t tell you the exact names of all 6 in the group, we do know that the Gang of Six is represented by 3 Republicans and 3 Democrats.
We said in our Weekly Wrap that we expected some kind of compromise between the two parties on the U.S debt crisis and evidently these Cowboys have been working behind the scenes for a few months now.
Some of you will remember the Gang from 2009 which was formed to deal with HealthCare Reform while this party was formed to deal with the U.S. debt crisis. The current group proposed $4 trillion in cuts over a decade which won-over Wall Street but will need to win votes in D.C. before anything becomes official.
Although the bears held resistance, they are now facing a possible breakout after having the bulls on the ropes on Monday. Tuesday’s turnaround only enhances what we warned you of heading into July and that was to expect increased volatility.
After our midday update yesterday, the bulls put it in second gear after hearing the President say Congress was close to raising the U.S. debt ceiling (no surprise there) and presented the backed the Gang’s ideas. With that said, the market stayed strong and the bulls went out long as the indexes closed near their highs for the day.
Believe it or not, the Dow posted its best one-day gain of the year by adding over 200 points, or 1.6%, to close at 12,587. The Blue-Chips reached a high of 12,607 which was just above the 12,600 resistance level we have been outlining for a few weeks. Next stop for the index is 12,800 with a possible shot at 13,000. Short-term support remains at 12,350.
The S&P 500 hammered out a 21 point win, or 1.6%, to finish at 1,326. The bulls did a tremendous job of holding down support at 1,300 and didn’t flinch when we dipped below this level, briefly, on Monday. The S&P closed above 1,325 and will next face tests at 1,334 and 1,350. If cleared, then 1,375-1,400 comes back into the picture but another failed rally could quickly lead us back down to 1,300, or worse.
We saved the best for last because the big story was Tech as the Nasdaq reclaimed 2,800 and 2,825. The index added over 60 points, or 2.2%, to settle at 2,826, just two points off its intraday high of 2,828.
Futures are pointing towards another beautiful open on the heels of Apple’s (AAPL, $376.85, up $3.05) booming quarter. As usual, the company smashed Wall Street’s expectations as analysts were way behind on their estimates, again.
We will go over their numbers later but shares were kissing $400 in after-hours trading last night and those gains have held this morning.
There is more good news galore but the rest is inside our Members Area. Subscribers, check for the updates. Also, we have released a new video for those of you who are trading course members! Be sure to check your email inbox for our work on charting, stocks to watch, and LEAP options. For those of you who would like to see the video, remember, you can get our option trading course, How to trade Options on Momentum Stocks, at no charge (an $899 value!) if you upgrade your membership to a 1-year subscription. Shipping is also included.
For those of you who are not members, we encourage you to subscribe to our 1-year deal because we will be yanking this offer at the end of the month.
We will be back at 1pm with our next update but we may send out Trade Alerts if we see an opportunity to take some profits or add new trades!
Here is how we’re looking: Dow futures (+53), S&P (+7), Nasdaq (+20).
Tags: AAPL, About options trading, Apple's earnings, option trading, stock and option, stock exchange, stock to buy, stock trading, trade online, trading futures, trading online, trading system, what are stock options, what is a call, what is option trading
Posted in Company Commentary, Earnings, Market Analysis | Comments Off
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Buffett Backs Bank of America (BAC)
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