Get RSS Feed
9:05am (EST)
The market struggled for much of Thursday after a weaker open and briefly made it into positive territory a few times as the bears tried to keep their fingers in the dike. However, by the final hour of trading, the bulls flooded the market with buy orders and the bears ran for the hills.
The Dow managed to pull out a 44 point gain to close at 10,611, its highest level since January 20th. The 2010 high for the index is 10,767 and if we don’t get there today, it sure looks like we will next week.
We have also been talking about the 1,150 level for the S&P 500 and that is exactly where the index closed with its 4 point gain. This level was hit twice at the beginning of the year and was a good sign that the bulls are serious on taking the market higher.
The real deal has been the Nasdaq which set a fresh 52-week high by adding 10 points to close at 2,368. We recently raised our target for the Nasdaq to 2,400 but we may have to raise that again if the Dow and S&P can break through 10,800 and 1,175. If so, then we have mentioned that the Dow could run to 11,000 while the S&P could move towards 1,200 if those two indexes can keep up with Tech.
On Tuesday, we told you about Amylin Pharmaceuticals’ (AMLN, $21.19, up $0.29) big day today and it looks like they could be popping champagne at headquarters. The FDA could approve its diabetes drug Byetta, for which it is partnered with Eli Lilly (LLY, $35.82, up $0.48), to produce.
This will be great news for Amylin if the drug is approved and will be a blockbuster as it should easily do $1 billion in sales, quickly. Byetta would be the first once-weekly treatment in the war against type 2 diabetes.
As you can imagine, there was a tremendous amount of action in the stock as well as the option pits. Over 12.6 million shares traded hands (3X normal volume) but there were plenty of big bets being placed on both sides of the ball.
The March 25 calls (AQM100320C00025000, $0.90, flat) were the flavor of choice for bullish traders as over 22,000 contracts traded hands. As far as the skeptics, they were hoarding the March 15 puts (AQM100320P00015000, $0.70, up $0.20) as volume came in at 25,000 contracts.
Most traders probably played the stock one way, betting for or against approval, but the two aforementioned options could have been used as a strangle option trade. We mention these types of trades from time-to-time but we stayed on the sidelines for this one. It is somewhat of a “chicken trade” or a “safety” play and can be used if you think a HUGE move is possible, either way.
We also mentioned we were watching Alkermes (ALKS, $12.64, up $0.08) which is a company that enables the slow delivery of the drug. No word yet but this breaking news will be hitting the market sometime today.
Retail sales came in better-than-expected and the futures, which were already up, got stronger. As we head to press, the Dow futures are up 36 points to 10,583 while the S&P futures are up 5 to 1,150. The Nasdaq 100 futures are also up 5 points and stand at 1,927.
Moody’s Sours Bulls Mood
Monday, March 15th, 2010
1:20pm (EST)
The bears have started the week off by tugging on Superman’s cape, but they have done little damage up to this point. The are numerous headwinds the bulls are facing today, but it seems they are taking their time digesting all of the news just like we are.
The Dow is currently down 25 points to 10,599 while the S&P 500 is lower by 6 points to 1,144. The Nasdaq is down 17 to 2,350.
Moody’s (MDO, $28.22, down $0.04) said the risks are growing for some of the world’s largest triple-A-rated countries: Germany, France, the U.K. and the U.S.
And…?
Moody’s has gotten everything wrong, and we honestly don’t know why anyone would care what the firm has to say. They missed so many calls during the subprime and financial crisis that it’s hard to believe the company is still in business. Even harder to believe is the fact shares are trading near $30…
The Financial stocks are taking a hit as Washington pushes ahead this week on legislation to overhaul the our financial system. The bill is expected to ”curb” Wall Street’s influence over the Federal Reserve Bank of New York. It looks like Obama wants to have the final say on who runs the show in NY instead of the current board that includes representatives of member banks.
As far as economic news, the Federal Reserve Bank of New York’s Empire Manufacturing Survey came in at 22.86 this month from 24.91 in February. Wall Street had expected a reading of 24 for the month. Although manufacturing output was down the report said it is continuing to improve at a steady pace in March, including a rise in new orders and improvement in the labor markets.
Amylin Pharmaceuticals (AMLN, $22.89,up $2.63) is up over 13% after the FDA said it didn’t need more clinical data on its diabetes drug, Bydureon. However, the FDA did say they would like changes made to clarify the product labeling and asked questions about the drug’s manufacturing process.
We were more interested in shares of Alkermes (ALKS, $13.79, up $1.58) which is the company that enables the slow delivery of the drug. The stock has jumped 13% but the March 12.50 calls (QAL100320C00012500, $1.15, up $0.30) are up 35%. They have traded to a high of $1.75 which is where they opened.
If Amylin hadn’t blown its inspection on Friday, we may have swung the bat…
We think there is a chance the bulls wake up today as the market has come off its lows and overall we are still expecting a higher March. We have update the Members Area so let’s get to it…
Tags: Alkermes, ALKS, AMLN, Amylin Pharmaceuticals, MDO, Moody's, option picks, option signals, options alerts, stock options trading
Posted in Company Commentary, Market Commentary | Comments Off